Credit unions seek payback


One of the biggest irritants felt by commercial banks at present is the marked trend on the part of debtors to prioritise unsecured debt at the expense of secured.

We know that credit card companies are checking on debtors’ credit ratings; for those whose ratings are trashed – for example, those who are already missing mortgage payments – these issuers are actively offering attractive deals to settle balances with lump sums of a fraction of the outstanding. Meanwhile, credit unions are deducting repayments directly from public servants’ salaries.

It is a fact that the general public seems to be more receptive to at least attempting to pay back credit unions in preference to their banks. This may be down to a greater empathy and loyalty to the credit union sector but more likely due to the fact that as banks have been perceived as unaccommodating in terms of issuing new credit, so the credit union is seen as a lender of last resort.

But while it might have been assumed that individual credit union debts are relatively small, in fact this is not the case in many instances.

StubbsGazette analysis of judgments granted in favour of credit unions in 2012 shows that the average value involved per credit union plaintiff was €99,644 – a fairly astonishing figure but in fact just down from 2011 which came in at €100,920.

The median value per credit union plaintiff was over €41,000 – around the same level as last year (the median value excludes the extreme outliers in the distribution – it is the “middle figure” in the values).

In 2012 there were 769 judgments with an aggregate value of €13,053,419; in 2011 there were 747 judgments with a value of €12,514,035.

Some 340 – or 44.1 per cent – of these debtors offered part payment to the value of €556,000. This sum represents just 4.0 per cent of total value but it should be remembered that this figure would typically represent the early stage of a repayment plan and does not indicate the final amount likely to be collected by the creditor, which would be higher. The average percentage of debt paid among part-paid debt was 13.6 per cent compared with 13.1 per cent in 2011.

It is an indication of the sentiment in which credit unions are held by even their defaulting members that the percentage of debtors offering part payment actually rose in 2012 (44.1 per cent compared with 42.1 per cent in 2011).

As in 2011 Finglas Credit Union registered most judgments (54 compared with 44 in 2011). The largest individual judgment of just over €675,000 was registered by Waterford Credit Union. Judgments registered by St Canice's Kilkenny Credit Union topped the €1 million mark.

TABLE 1
Top 5 Credit Union Plaintiffs 2012
Individual Judgment Value

Credit UnionIndividuel Judgment Amount
Waterford Credit Union Ltd., Waterford€675,044.65
Cuchullain Credit Union Ltd., Louth€329,661.98
Charleville Credit Union Ltd., Cork€316,221.60
St. Canice's Kilkenny Credit Union Ltd., Kilkenny€298,846.60
St. Canice's Kilkenny Credit Union Ltd., Kilkenny€264,857.64


TABLE 2
Top 5 Credit Union Plaintiffs 2012
Collective Judgment Value

Credit UnionCollective Judgment Amount
St Canice's Kilkenny Credit Union Ltd, Kilkenny€1,241,633.98
Waterford Credit Union Ltd., Waterford€675,044.65
St Francis Credit Union Ltd., Clare€660,590.99
Cuchulainn Credit Union Ltd., Louth€581,961.37
Bishopstown Credit Union Ltd, Cork€565,404.07

Credit unions will welcome any preference in terms of customer propensity to repay and are quite right to be proactive – not to say aggressive – in their collections tactics.

Under the new personal insolvency regime credit unions are likely to be hit disproportionately harder than the mainstream banks because the vast amount of their debt is unsecured. Under the new regime those debtors granted a Debt Relief Note may be able to write off up to €20,000 in unsecured debt; those granted a Debt Settlement Arrangement could in fact write off much more. It seems that very many credit union debtors could opt for the latter scheme. If the debtor applies for a Personal Insolvency Agreement the secured debtors will take precedence and the credit union debt may be written off in its entirety.

Top Judgments Registered

11.11.2020

Urban Green Private Limited
Address: R/o Atkins Hall, River Towers, Lee Road, Cork
Amount: €734,547.90

10.11.2020

Thomas O'Brien
Address: Castlegrace, Clogheen, County Tipperary
Amount: €93,749.13

10.11.2020

Margaret O'Brien
Address: Castlegrace, Clogheen, County Tipperary
Amount: €87,979.01

06.11.2020

Sean Browne
Address: 24 Woodlands Avenue, Arklow, Co Wicklow
Amount: €38,094.60

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