A judge says she is ‘absolutely amazed’ a Credit Union took a case to court seeking a judgment against a borrower who had paid off more than two-thirds of the debt in the last year.
Ballinrobe Credit Union took a civil case against a local woman from the town, despite repayments of over €17,000 on a €26,000 loan being made in the last 12 months.
At Castlebar District Civil Court on Friday last, Judge Mary Devins said it would be both ‘legally and morally wrong’ to accede to the Credit Union’s request. She ruled in favour of the defendant and awarded her legal costs.
The court heard that the defendant (name withheld), took out a loan with Ballinrobe Credit Union for €26,000 for home improvements, and that repayments of €1,050 a month were agreed. However, the court heard that after the defendant lost her job, she could not meet these repayments.
In 2013, after a period of non-payment, it was agreed with the Credit Union that she would repay €25 a week. In January 2015, the amount owed had increased above €26,000, as repayments were not even covering the interest rate.
The borrower increased her repayments from €25 to €40 a week in April 2015 and then to €100 per week in June 2015. The court heard €100 has been paid weekly since.
In May 2015, her Credit Union shares (savings) of €12,755 were also paid against the loan.
The current amount outstanding on the loan is now €10,365.04.
Eanya Egan, solicitor for the defendant, told the court it was unnecessary to take an application for judgment against her client at this stage. Ms Egan said the loan would be paid in full in two years’ time if the €100 a week payments were maintained.
Michael McDarby, solicitor for Ballinrobe Credit Union replied: “The key word is ‘if’.”
Ms Egan said having judgment awarded against her client would lead to a poor credit rating and affect her and her husband’s ability to secure a mortgage and buy a house. The court heard that the couple, who have three children under the age of six, live in an apartment in the town but are hoping to move to a house in the coming years.
Ms Egan also said that her client’s shares were only accepted by the Credit Union as payment against the loan after the matter was canvassed by Ms Egan on behalf of her client. Mr McDarby disputed this.
Ms Egan asked Mary Feeney, Manager at Ballinrobe Credit Union, how the decision to take the matter to court was taken. Ms Feeney said the case was reviewed by the Credit Union’s board members, who advised that it be referred to the Credit Union’s solicitors, McDarby and Co.
Michael McDarby told the court that the reason for the application was for a court order to ensure repayment. The defendant asked to be allowed to continue to repay and for her credit rating not to be compromised.
Ms Egan said her defendant was resisting the application, as a judgment against her ‘would do untold damage’ to her credit rating.
The defendant told the court that after the Credit Union money is paid and other household and baby products are bought, ‘no money is left any week’.
She said she was initially able to pay €1,050 a month when she was in a well-paid job in Galway but when she lost that job, her ability to repay was adversely affected.
The court heard the defendant initially paid €600 a month and other amounts when she could but that by November 2012, payments ceased. Legal action was threatened in January 2013 and in February 2013, a short-term agreement was made for the defendant to pay €25 per week.
Ms Feeney told the court this amount was not covering the interest on the loan.
The court heard legal proceedings were taken by the Credit Union early last year, after which the defendant’s Credit Union shares were paid against the loan and the weekly payments were increased to €40 in April of last year and €100 in June, which has been paid weekly since then.
The matter was initially before the Circuit Court, before being brought back to the District Court last year. The Credit Union lodged proceedings to have the matter again before the court last Friday.
Judge Mary Devins said the case ‘is an absolutely fascinating insight in microcosm’ of what has been happening in Ireland with debt since the downturn.
She said that millions in debt had been ‘written off’ from ‘very wealthy’ investors, but this case was at the opposite extreme.
She said Credit Unions were ‘set up to look after local people to get small loans to do small things’. “It was and is an amazing institution,” she added.
She said that while some Credit Union lending ‘got out of control’, it was always intended for ‘the likes’ of the defendant, for car loans and home improvements.
She added that like a lot of people, the defendant lost her job, got into financial difficulty and renegotiated her ongoing repayments, which were agreed.
Judge Devins said what was crucial is that the ‘contract’ is ongoing and that regular and agreed payments have been made.
“I’m amazed by the application before this court for a judgment to ensure ongoing payments. The debt is not due today. I am absolutely amazed this case is in today. It is legally and morally wrong,” she said.
Judge Devins said making a judgment against the defendant would be ‘so punitive’ as to be unfair.
Judge Devins also said such a judgment could actually mean the Credit Union would be waiting a lot longer than the two years it would take to collect the debt if the repayments continued at their current rate.
She ruled in favour of the defendant and awarded costs to Ms Egan.