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Personal Loans: Active Members
Objective
The primary purpose of the Personal Loan Program is to
grant eligible members personal loans in an amount of not
more than 75% of their total contributions. It is the
intention of the Board of Trustees to grant loans up to the
new ceiling of $50,000.00 as established in Act 6463,
Section 9B (1).
Eligibility
Active members contributing for at least two years shall
be eligible to make a loan against his/her total
contributions.
Rate of Interest
Interest rates are reviewed monthly and subject to change
based on the average margins of the local lending market in
conjunction with the minimum rate determined by the
actuarial studies.
Application
Each member eligible for a personal loan must complete an
application in the GERS offices of the St. Thomas/St. John
and St. Croix districts. The members are required to produce
government issued picture identification and their check
stubs for the last two consecutive pay days. The loan
processor shall determine the amount the member shall be
eligible to borrow.
Loan Purposes
Members may make loans for any of the following purposes:
(1) Medical Expenses; (2) Dental Expenses; (3) Hospital
Expenses; (4) Funeral Expenses; (5) Down Payment on Purchase
of Real Estate; (6) Repayment of Refunds/Prior Service to
the System; (7) Home Repairs; (8) To pay Taxes; (9)
Educational Expenses; (10) Repayment of Loan Debt to the
System; (11) Personal Expenses.
Repayment Term The principal amount, together with
interest thereon, shall be repaid in a maximum term of ten
(10) years or 26 equal installment payments that shall be
made through salary deduction. Members' biweekly payments
shall not be less than 5% of their stable gross biweekly
salary. The member's salary, not inclusive of compensation
for overtime, must be sufficient to accommodate the
scheduled biweekly repayment amount. The member's net take
home salary after the loan payment and other charges shall
not be less than $25.00
Application Processing Fee
The non-refundable application processing fee for Fiscal
Year 2006 is $45.00.
Documents
Qualifying members shall be required to execute a
detailed Promissory Note, the Details of Loan, and
Certificate of Insurance for the credit life insurance
policy, and any other documents as recommended by Legal
Counsel.
Member Loans in Default
- A. Any personal loan that is in default shall be
closed within sixty (60) days of the default of said
loan. The System shall provide ten (10) days written
notice of the intent to close the loan.
- B. After closing any personal loan, the principal
balance of the loan and accrued interest thereon shall
be deducted from the member's accumulated contributions.
- C. If, for any reason, a loan is not closed after
sixty (60) days of the date of default of the loan, no
interest shall accrue past the date on which the last
payment on the loan was supposed to be remitted.
- D. Any member, who desires to settle the outstanding
balance of a personal loan (full amount of principal and
interest accruing up to the 61st day) through lump sum
payment, shall be permitted to do so.
- E. The member shall have the opportunity to arrange a
special payment plan wherein a combination of lump sum
payments and installment payments may be made. In
devising a special payment plan, the Administrator shall
use his discretion and shall take into consideration the
amounts due, the sum of any lump sum payment, the sum of
any installment payment, and the amount of time wherein
either payment or a combination thereof shall be made.
Loan Refinancing
Members are allowed to refinance an existing personal
loan and receive the difference between the new loan amount
and the payoff balance and charges. Members shall not have
more than 1 (one) loan in a fiscal year.
Bankruptcy
Members who have been declared bankrupt or are
contemplating filing for bankruptcy are not eligible for
loans. The following must be submitted before the members
borrowing privileges are reinstated. (1) A dismissal or
discharge by the Bankruptcy Judge; (2) Written permission
from the Bankruptcy Trustee.
Credit Life Insurance
Credit Life Insurance is provided by GERS through Madison
National Life Insurance Co and is required on all personal
loans. This policy shall effect a payoff of the unpaid
balance in the event of death, and allow the members'
beneficiaries to receive the full contributions. The payment
of the premium shall be factored in with the regular
principal and interest payment throughout the term of the
loan.
Declined Loans
Loans to members are declined in cases where: (1) member
does not meet eligibility criteria; (2) the member's take
home salary is insufficient to accommodate the biweekly
repayment amount for the amount of loan requested; (3) the
member has been delinquent in payments less than sixty (60)
days and cannot make the cash payment required to bring the
loan current; (4) the member is not in good standing with
another GERS loan.
Flagged Accounts
Members with other GERS loan accounts shall be flagged
for any or all of the following reasons: (1) any outstanding
mortgage or auto loans with past due payments; (2) any
outstanding mortgage or auto loans not adequately covered by
the mandatory insurance. The member shall be required to
correct any other loan delinquency before he/she is eligible
to complete a loan application, except in cases where the
loan proceeds will be used to correct said delinquency.
Qualifying Time Line
GERS ensures that personal loans will be processed and
disbursed within ten (10) working days or less, except in
cases where the member is an employee in an off island
office.
Credit Reporting
Because a credit report provides a detailed analysis of a
member's credit history and is a major component in
determining the probability of repaying any loan, the System
is obligated to report each loan to the Credit Bureau on a
monthly basis. This will avoid the System's loan from being
overlooked by other lending institutions and eliminate the
possibility of a member over extending themselves.
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