Central Bank to proceed with debt scheme despite opposition of credit unions

Wednesday 12 June 2013 17.03
The Central Bank directly approached individual credit unions about the pilot scheme
The Central Bank directly approached individual credit unions about the pilot scheme

The Central Bank is to proceed with a controversial pilot scheme to write off unsecured debt of distressed borrowers, despite strong opposition from the Irish League of Credit Unions.

The initiative has been agreed with banks and credit card providers.

Speaking when the scheme was launched, the league's chief executive Kieron Brennan said that it did not give sufficient bank debt relief to borrowers.

Despite the resistance of the league, the Central Bank directly approached individual credit unions. It is understood the bank has garnered sufficient support to proceed with its pilot scheme next month.

The initiative would target borrowers who are under pressure from a variety of lenders to repay debts.

Under the pilot scheme, a homeowner could be offered a split mortgage that parks a portion of their debts.

The borrower would pay an agreed amount to their creditors on a proportionate basis for two years.

If the customer is still in difficulty after two years, their unsecured debts such as credit card or credit union loans would be wiped out.