Jail terms for six credit union members

SIX members of a Cork city credit union who failed to repay borrowings were sentenced to jail during the year.

The six, members of Gurranabraher Credit Union (GCU), were sentenced for failing to appear in court to explain why they had not met the terms of their installment orders. Under an installment order, people are legally required to make regular repayments in an effort to clear their arrears.

Failure to comply with an installment order can lead to a prison sentence.

Speaking at the credit union’s AGM on Monday night, manager Philip Hosford said while six committal orders were granted, those involved “wouldn’t all have necessarily gone to jail during the year, for various reasons”.

However, Mr Hosford was unable to say how many of the six were imprisoned or the length of the sentences handed down.

“Definitely people went to jail and did time,” Mr Hosford said. “There was six committal orders granted, but there are timing issues at the start and end of the year. It might take gardaí time to act on a committal order and it takes a few months for the paperwork to be processed, but six were granted with varying terms.”

Mr Hosford emphasised that technically, members had been jailed for failing to comply with a court order and not for non-payment of arrears. “They are contempt of court issues and if a member comes to us and they have extenuating circumstances and they do make a genuine effort to pay, we will certainly do what we can to facilitate that,” Mr Hosford said.

While GCU was in a position to sanction a dividend for members (0.75%, up from 0.5% in 2010), the number of loan accounts in arrears has continued to rise, from 745 at the start of the year, to 890 currently. This represents approximately 18% of all member loan accounts at the credit union. Accounts are deemed in arrears if no repayment has been made for nine weeks.

Chair of the credit committee, Richard Murphy, said the continuing increase in arrears levels reflected the worsening financial position of members. This is reflected in the shrinking loan portfolio, down from €44m last year to €37.8m this year. During the year, members drew down almost 5,000 loans, with a value of €10.2m, a 17% drop on 2010 loan demand. The interest reaped on loans is the credit union’s bread and butter.

Treasurer Catherine Coleman said the year’s total income was €5.35m, made up of €3.8m interest on members’ loans and €1.5m in deposit and investment income. She said an excess of income over expenditure of €1.6m underlined the financial stability of GCU. The amount of bad debt recovered rose from €335,000 to €405,000, up 20%.