Credit Union savings loan gone wrong

frednflo

Hi
i had a savings loan with a credit Union.
they have put a default notice on my credit reference file.
The statement I have shows I had more savings than outstanding debt. I accept that interest would have been accruing but I also made further payments into the savings account.
At some point I stopped paying and stopped receiving statements, moved address and lost track of them as I thought it was sorted. I had more savings than loan outstanding so assumed they’d cancel each other out, as per the agreement which held the savings as guarantee.
I feel they should have taken the savings to cover the loan, and not let the interest accrue to the point where it exceeded the savings, as that was the whole point of the savings in the agreement. I can’t say it feels like they acted in the best interests of their customer or themselves to safeguard the savings of others. Since then I got distracted by work and they set off the savings against the loan at a point where the debt exceeded the loan. My point though is that the savings were a guarantee for non-payment of the loan and there was enough savings there to cover the loan at the time I stopped paying into the savings account: wouldn’t that trigger the guarantee?

Am I too late to do something about this now?

MorningcoffeeIV

You were too late at the point you stopped paying and got the default.

They may have the right of offset but that doesn't change the fact you defaulted on the agreement.

sourcrates

In order to use the right of set off, and get their money back, the creditor must follow certain rules.

Obviously they can`t just help themselves to your money, there is a set out procedure to follow, and it all begins when your account gets into arrears.

Can banks take your money without your permission?

A bank can’t take money from your account without your permission using right of offset unless the following conditions are all met:

1. The current account and the debt are both in your name. The position is a bit more complicated with joint debts and joint accounts
2. The current account and debt are both with the same lender. A bank can’t take money from your account for a debt with a different company
3. The debt they’re taking money for is in arrears. They can’t take money by right of set-off if the debt repayments are up to date
4. They’ve warned you clearly in advance that they may use right of set-off if you don’t contact them or pay back your arrears
5. They’ve taken your individual circumstances into account and whether taking the money might cause you hardship.

The same rights apply to all banks, the set off procedure is clearly described in the terms and conditions set out in the banking code.