Credit union advice needed please.

darragh o meara

Ok heres a bit of a background to the situation:

2005-2007 I got a series of loans from the credit union totaling 20k approx which I was servicing at 200 per week.

2008 I was made redundant from my job, I went and met the manager in the Credit union the same day to explain the situation to him before I started missing payments ( i had plenty of saving and redundancy to keep me a float for a while so I agreed to pay as usual but told them I would need to revisit it at some stage in the future)

2010 My savings ran out, That year I also decided to go back to college to have some chance of getting a decent job on completion, SO went and visited again and explained to them that my savings had run out and I needed to reduce my payments so after a bit of negotiation they decided to let me pay 10 euro per week towards the loan as I was only receiving 80 per week from the SW. This has been paid religiously every week since.

Fast forward to today and I visit to find out what the balance on the loan is and Im informed that my savings have been taken from my account and put toward the loan ( savings at the time of transfer 6200 euro) When I questioned it I was told that a letter was sent to me (which I did not receive) and that I should have already been aware of it.

Now the advice I need is:

A. Should they be allowed to do this seen as I was keeping to the agreement I made with them? Nor did I authorize it. SUrely I should have been given the option??

B. Should a letter of this nature not be registered?

C. I recently found out that Credit Unions give you free loan protection insurance ( Can I go back to them and complain that I was never offered it when I told them I was made redundant? )

The savings thing has me very annoyed as I am due to finish the loan next year sometime and I had planned to use the money to pay the ever rising college fees for next year and put some aside for a rainy day fund and lets face it Ive had a lot of rainy days in the last 2 years where I just had to get wet. My main priority all along was to keep the Credit Union paid as they were very good to me when the banks weren't.

gerryo777

darragh o meara wrote: »

Ok heres a bit of a background to the situation:

2005-2007 I got a series of loans from the credit union totaling 20k approx which I was servicing at 200 per week.

2008 I was made redundant from my job, I went and met the manager in the Credit union the same day to explain the situation to him before I started missing payments ( i had plenty of saving and redundancy to keep me a float for a while so I agreed to pay as usual but told them I would need to revisit it at some stage in the future)

2010 My savings ran out, That year I also decided to go back to college to have some chance of getting a decent job on completion, SO went and visited again and explained to them that my savings had run out and I needed to reduce my payments so after a bit of negotiation they decided to let me pay 10 euro per week towards the loan as I was only receiving 80 per week from the SW. This has been paid religiously every week since.

Fast forward to today and I visit to find out what the balance on the loan is and Im informed that my savings have been taken from my account and put toward the loan ( savings at the time of transfer 6200 euro) When I questioned it I was told that a letter was sent to me (which I did not receive) and that I should have already been aware of it.

Now the advice I need is:

A. Should they be allowed to do this seen as I was keeping to the agreement I made with them? Nor did I authorize it. SUrely I should have been given the option??

B. Should a letter of this nature not be registered?

C. I recently found out that Credit Unions give you free loan protection insurance ( Can I go back to them and complain that I was never offered it when I told them I was made redundant? )

The savings thing has me very annoyed as I am due to finish the loan next year sometime and I had planned to use the money to pay the ever rising college fees for next year and put some aside for a rainy day fund and lets face it Ive had a lot of rainy days in the last 2 years where I just had to get wet. My main priority all along was to keep the Credit Union paid as they were very good to me when the banks weren't.

If you had an arrangement with them I don't think they should have used your savings against the loan but it depends on what was in the 'letter' they did or didn't send to you.
I find that the credit union's are very amaturist in this respect, they want to be like banks (god forbid) but most of their staff are recruited on a wink and a nudge and therefore are not really qualified for their positions.

broker2008

For years the credit unions would have been delighted to get a little towards loan and a little of even a lot towards loan, I imagine they are trying to reduce the debts in the loan book. I always remember credit union members receiving phone calls from the credit union to say that they were eligible to take out a loan eventhough the person didnt need one. The interest on the loan could have been 12% and the loan amount might have been invested in the share portion of the account at an interest rate of maybe 9%.

fleet

I don't see the problem here (besides a little rule bending).

You wouldn't normally have been allowed to touch the savings in you share account while the loan account was open anyway.

All the CU have done is helped reduce the loan interest by reducing the outstanding loan with the contents on the share account.

Instead of now using what would have been you savings for the college fees next year you'll simply have to put aside the money you'd otherwise have used to pay the loan.

darragh o meara

fleet wrote: »

I don't see the problem here (besides a little rule bending).

You wouldn't normally have been allowed to touch the savings in you share account while the loan account was open anyway.

All the CU have done is helped reduce the loan interest by reducing the outstanding loan with the contents on the share account.

Instead of now using what would have been you savings for the college fees next year you'll simply have to put aside the money you'd otherwise have used to pay the loan.

For starters I wasn't looking for money from them today thats not the point. I do know that my savings were locked until the loan was paid off.

As for putting the money away myself thats easier said than done especially when your trying to support yourself in college and support a 3 yr old child, at least when it was in the CU I was paying my loan off and that was there as a bit of an incentive to get it paid that bit earlier so i could access the funds.

Im in the middle of preparing a letter to the manager of the CU but I don't think its gonna solve anything whatsoever. I just find it a bit s hit ty that I find out that all the savings I had left are now gone along with some of the chances of finishing college. No doubt Ill probably pull something off but it means more hardship when there could have been a little easing if only just for a while.

buzz11

It seems from what you say that the CU has acted well outside its remit and authority. Generally speaking the CU would have no entitlement to interfere with your savings account without your explicit instructions, not a letter informing you of their intended actions but an actual instruction from you. (there is a significant difference)

However to be certain that they did not have the authority, you'd need to check your loan terms and conditions, as there is a possibility that one of the conditions of the loan would be that they could use your savings to reduce your loan balance. (particularly since you are in arrears)
Question B...this depends on what your find out about the t&c of the loan.
Question C...were you offered loan protection insurance and did you decline it? does the loan protection insurance cover redundancy? Simply put, there are too many questions of "what-if" nature and its water under the bridge at this stage.

So how to move forward?
Write a letter to the credit union manager, ensure you title it "Formal Complaint" because then it enters their formal complaint procedures which they are required to have under their licence from the Central Bank.
Ask in the letter;
-under what entitlement did they transfer funds from your savings account without your permission.
-request a copy of the letter they claim they sent you.

Finally, end the letter requesting that they put the situation back the way it was. [assuming this is what you want]

Don't get angry or rant too much, if they have the power to do what they did then you can't do anything about it, conversely, if they didn't have the power then a formal complaint will put things back.

As gerryo777 says they are a bunch of well meaning amateurs (despite some being Qualified Financial Advisors).

Let us know how you get on...

chris85

Most loan agreements are on the basis of the shares being used as collateral on them. If the original agreement is defaulted on they would be within their rights to move in on the savings in the shares account which the OP has with the CU.

Generally a letter is sent advising they are terminating the credit agreement unless the arrears are brought up to date. This is generally done if no payments are being made, or if small payments are being made lower than in the loan agreement it allows them to call on the full balance to be repaid and pursue through the courts. This is not required to be registered.

Ask for the copy of the letter and see what they come back with.

Credit unions do not offer free loan protection. I was offered it but do not require it. Certainly not included in my credit agreement.

Darragho

To be honest, I hate to say this but I have found the banks to be more accomodating to me in my hour of need than the Credit Union.

I fell on hard times and BOI and MBNA were very accomodating in assisting me in restructuring Loan while my credit Union were most difficult.

I look forward to having my loan cleared with the credit union next year and I intend to have nothing further to do with them as am disgusted with the way they treated me implying that I was not prudent and they prefer to deal with people who are.

best of luck with them op cause if they are like the shower that I dealt with they wont be much good, I had a very well paid job and lost it yes I was used to spending but had the income to cover all my outgoings until things turned sour for me.

badgerbroc11

Darragho,

Dissapointing to hear about youre experience. In my credit union, what has happened to you would have been explained a lot clearer. To try and answer some of the points raised:

Under the Credit Union Act 1997 shares are attached to the amount of the loan outstanding and it is under the act that this transfer is allowed. Obviously you should have been told this. To speculate on why this was done - I'm assuming you had approximately 10k left on youre loans. A repayment of €10 per week would not be enough cover the interest, by transferring the shares across, it would prevent interest arrears from building up. The intention may have been correct!

Regarding Loan protection insurance, this is a type of life cover and only kicks in should you die or become unable to perform any work due to illness or disability. Dont mix this insurance up with Repayment Protection Insurance, which is very expensive and rarely pays out. A small number of Credit Unions do offer this but usually as an additional cost to the member.

Call the CU and arrange for a meeting with the manager to get an answer for each point raised. If you are not completely satisfied write a formal letter of complaint but address it ' Strictly Private', and to the chaiman of the board, who is an ordinary member like yourself. This will ensure that the board becomes aware of what is happening.