Credit Union screwed my brother over

[Danielle24]

Hi,

Looking for advice on an issue my brother has and what his options are. They could be well within their rights but the way the issue was handled was terrible.

He had a loan with them which he was paying €50 a week off, he went travelling and continued this payment for a while, he got a bit strapped as he moved jobs and they weren't paying as much. He contacted the credit union, explained his circumstances and asked if he could reduce his payments to €25.00 a week. His loan wasn't huge so €100 a month is still a respectable amount. He continued to pay this amount every week and thought that everything was fine.

He's recently returned and went in to the credit union to get a top up on his loan, only to be told that his account was in serious arrears. They said that the account was going in to arrears by €25.00 every week, that he is now €1300 in arrears and also paying interest on arrears.

He is very deflated to say the least, as he genuinely didn't even know there was a problem.

This credit unions practice has been questionable based on personal experience and I am so annoyed for my brother who has paid religiously every week, based on something they agreed to.

Any advice appreciated.

 

[callybags]

Did they agree to the lower payments?

Or did they just not explicitly disagree?

You can't just ring up and say "I'm reducing my payments" and expect it to be ok.

 

[STEINER]

Well, if he had a loan agreement for repaying €50 pw, €25 per week is 50% less of a repayment. He can hardly expect a top-up loan under the circumstances, its just too risky from the CU point of view.

 

[Brendan Burgess]

Hi Danielle

Well obviously they wrote to him agreeing the reduced amount. So he should just show them that letter.

and also paying interest on arrears.

Most people misunderstand that. Credit Unions and banks charge interest on the balance outstanding on the loan. The balance is higher than it would otherwise have been because he has not been paying it down as quickly. So he pays more interest. But there is no additional or penalty interest.

He's recently returned and went in to the credit union to get a top up on his loan,

The fact that he reduced his repayments to €25 suggests that he does not have the capacity to repay any more?

 

[emeralds]

So he can't pay his original loan amount and now wants to top up? And you say the CU are screwing him over????

 

[ontour]

The likely scenario is that the credit union agreed to reduced payments but did not change the loan agreement to increase the term of the loan. This usually happens when the reduced payments are likely to be a short term situation.

As explained above, your brother is not any worse off financially than if he had signed a new loan agreement.

Either your brother did not understand their explanation of what the reduced payment would mean or the credit union did not explain it to him properly.

 

[Danielle24]

So he can't pay his original loan amount and now wants to top up? And you say the CU are screwing him over????

That's not the issue. They agreed to the lower amount and are now telling him he's in arrears. They have not sent one letter in over a year to say his account was in arrears. They are charging him interest on the loan and on the arrears. He has started a new job and has the capacity to pay more now. He went for the top up under the assumption that his account was fine. He was not aware there was an issue. It's not the top up he's annoyed over, it's the state of his account.

 

[Danielle24]

Hi Danielle

Well obviously they wrote to him agreeing the reduced amount. So he should just show them that letter.

Most people misunderstand that. Credit Unions and banks charge interest on the balance outstanding on the loan. The balance is higher than it would otherwise have been because he has not been paying it down as quickly. So he pays more interest. But there is no additional or penalty interest.



The fact that he reduced his repayments to €25 suggests that he does not have the capacity to repay any more?

Hi Brendan,

I'm not sure if they wrote to him, but if they did that would be great.

 

[Brendan Burgess]

Hi Brendan,

I'm not sure if they wrote to him, but if they did that would be great.

If they did not write to him, then he does not have a revised agreement.

I think that your overall approach of "credit union screwed my brother over..." is wrong.

He thought he had an agreement.
He may not have had.
That is a misunderstanding - this sort of thing happens.

He needs to sit down with the manager or committee and explain himself. This is a membership based organisation.

As he can pay more, he needs to clear his "arrears" as quickly as possible.

He needs to check his ICB record. They may well have registered that he is in arrears which means he won't get a loan or mortgage anywhere for at least 5 years.

 

[Danielle24]

If they did not write to him, then he does not have a revised agreement.

I think that your overall approach of "credit union screwed my brother over..." is wrong.

He thought he had an agreement.
He may not have had.
That is a misunderstanding - this sort of thing happens.

He needs to sit down with the manager or committee and explain himself. This is a membership based organisation.

As he can pay more, he needs to clear his "arrears" as quickly as possible.

He needs to check his ICB record. They may well have registered that he is in arrears which means he won't get a loan or mortgage anywhere for at least 5 years.

I understand where your coming from, it's just the way it was dealt with that's annoying. I have told him to make an appointment with them and go down to discuss it.

 

[Gerry Canning]

Tell him to keep his (cool).
Sounds like he got acceptance of the reduced payment but did not understand the implications , nor was it explained to him the ramifications of changing the original repayment terms.
If he stays (cool) and the Union (listens) should all be solvable without any more hassle.