Borrower jailed over credit union arrears

JOB loss and reduced income are largely responsible for the growing number of accounts in arrears at a Cork city credit union, where one person was jailed for nonpayment this year.

At the annual general meeting of Ballinlough Credit Union this week, members were told approximately 350 accounts are in arrears and the size of the arrears stood at €362,650 as of September 30.

In addition, a number of installment orders are pending against members who have not met the terms of their loans. Failure to comply with the terms of an installment order can lead to a committal order and imprisonment.

Credit controller Marcella O’Connell confirmed that the credit union had sought a committal order in relation to one member this year, and that person had spent 28 days in prison.

However chair of the board of directors, Tom Scriven, said they had been seeking to resolve the case for a number of years and a committal order was a last resort. Ms O’Connell said they “bent over backwards” to help those experiencing financial difficulty.

Jamie Rowan, chair of the supervisory committee, appealed for people to approach the credit union if they were having problems with repayments.

Credit Committee chair JJ Murphy said they were having to “get tougher” and seek a lot more information from members requesting loans but that some had objected to handing over payslips.

“What we are seeing on a regular basis is members who were excellent borrowers — and it’s a fact of life that they have lost their job or their income has come down — and the first thing to be paid is the mortgage, then food on the table, heat, light, and we’re way down in the pecking order.”

One member asked if the €4 million-plus invested with Anglo Irish Bank was safe.

Treasurer Sean O’Hanlon said the money was broken up into “a whole lot of different short-term investments” all of which were deposits and not investments in Anglo shares, and that they were safe “as long as we can trust the Government”.

Mr O’Hanlon said the figures for 2010 were “not the best set of accounts we’ve ever seen” and this had been the most difficult year he had ever witnessed in the history of his involvement with Ballinlough Credit Union.

“But the credit union is sound, I would encourage our members to use it. The more people who use it, the stronger we’ll get.” Mr Scriven said members’ money was safe and the credit union was open for loans.

In 2010, the value of loans given out fell by more than €500,000; more than €250,000 was written off in bad debts (an increase of €108,000 on 2009); bad debts recovered fell by more than €15,000 and profits halved. Bad debt provision has increased by more than €265,000.

Members were not awarded a dividend or loan interest rebate. Instead the credit union put €320,000 surplus into statutory reserves as it works on the regulatory requirement to hold 10% of its assets in reserve.

TOP five reasons for borrowing at Ballinlough Credit Union

1. Household expenses, 402 loans, valued at €992,295.

2. House renovations, 166 loans — €960,464.

3. Car purchase and insurance, 128 loans — €791,360.

4. Holidays, 115 loans — €235,428.

5. Christmas expenses, 61 loans — €67,404.