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The Money Doctor: Credit Union Loan

John Lowe answers your questions about Credit Union loans and pension plans

Q I have a €15,000 credit union loan. However, I used the money to prop up my business, which has now folded. Will they bring me to court if I just stop paying it? Christy, Dundrum

A Registered judgments secured by credit unions against defaulting customers are up by 800pc since January, 2009. Arrears are on the increase as is legal action to retrieve sums owed. I am presuming the credit union was not aware of the true purpose of your loan request and thus could not be culpable of side-stepping lending criteria in approving your loan. Apart from registering on the Irish Credit Bureau (where your record stays for five years), eventual legal action will ensue resulting in that judgment -- a mark that is on the ICB forever.

A positive course for you to take is negotiation. Communicate with your credit union; tell them where you are at -- business and employment-wise. Ask for an initial six-month moratorium, dust down the CV and see what work you can obtain.

Pension planning

Q I've just got a new job and my company will pay 5pc into my defined contribution pension if I match it. I am only 26. Can I put this off until I am at least in my 30s? Deirdre, Sutton

A By 2014, all employees (4pc) and employers (2pc) will have to contribute to a pension fund of some sort, and the retirement age will be raised gradually to 68 in 2026 with a uniform standard rate of tax relief applied to all contributions -- 33pc.

A pension is a must. It is a savings plan that attracts four specific tax breaks:

Independent, authorised and experienced financial advice is essential when deciding your future.