Charged-Off Loan on the System

Related Topics

To charge off a loan and keep it as charged-off status on the system, use the Loan Charge Off dialog box. The Loan Charge Off dialog box charges off an existing loan using a special loan type(s) designated for charged-off loans.

To access the Loan Charge Off dialog box, click Charge Off on the General tab.

Loan Charge Off

How do I? and Field Help

To charge off a loan, click the Charge Off Loan Type down arrow to select the charge-off loan type (Reporting Analytics: Charge Off Type - Closed Loans subject in the Loan folder). Then, click Save to save the charge off. Click Cancel to close the dialog box without saving your changes.

The Loan Charge Off dialog box displays the following information about the loan.

Field Description

Previous Loan Type

The previous loan type.

Keyword: GA

Loan Balance

The principal amount due on the loan.

Length: 12 numeric including decimal

Charge Off Date

The date the loan was charged off.

Keyword: CO

Reporting Analytics: Close Date (Closed Loans subject in the Loan folder)

Profile Codes

The credit union-defined profile code. The code consists of six categories (A-F). Each category has a maximum of 37 subcategories. The valid subcategories are A-Z, 0-9, and blank. For example, the code 0A9G3D might appear in this field.

If Y appears in the PERSONAL USE PROFILES field on the 370 or 620 Report Rules, the system calculates the number of loans for each subcategory within each category. (The 370 and 620 Reports provide loan profile information for your credit union.)

Using the above example, this loan would be included in the totals for subcategory 0 of category A, subcategory A of category B, subcategory 9 of category C, subcategory G of category D, subcategory 3 of category E, and subcategory D of category F.

If a blank appears in one of the categories in this field, the word NONE appears on the 370 and 620 Reports instead of a blank subcategory code.

You do not have to receive the 370 or 620 Report to use this field.

Length: 6 alphanumeric

Keyword: LI

Payment

The final amount to be paid on a residual loan.

Length: 12 numeric including decimal

Keyword: FP

Date

The date of the final payment on the residual loan.

Keyword: FD

Description

The description of the residual loan.

Length: 25 alphanumeric

Keyword: RD

The Loan Charge Off dialog box….

  • Debits the loan balance to Loan Loss GL account 719000.
  • Responds with the Transaction Complete message and CAN number. Displays the old loan type, loan balance, and loan charge-off date.
  • Affects the 030, 620 and 690 Reports.
  • Updates the non-financial date and teller number on the Account Information - Overview tab.
  • Updates the following fields on the Loans – General tab:
    • Payment Amount field with the loan balance.
    • Previous Loan Type field with the previous loan type
    • If the loan has a charged off date, the CHARGED OFF indicator will appear on the Loans tabs (it does not need to be a charged off loan type). In the account listing grid, CHARGED OFF will appear in the Description column for an open-end or closed-end loan if the loan has a charged off loan type.
  • Updates the Charge Off Date field on the Loans – Credit Bureau tab.
  • Responds with the following on the Closed Account File dialog box:
    • name and SSN of the member
    • loan charge-off date in the Closed Date field
    • message Charge Off in the Maintenance field
  • Does not store the interest due at the time of the loan.
  • Does not change the Total Interest field on the Loans – Interest tab.

After a loan is charged off, be sure to verify the following:

  • Make sure the Finance Charges Calculated But Not Collected (FCCBNC) field is 0.00 on the Loans - Interest tab.
  • Make sure the Primary field is 0.00 in the Rate group box on the Loans - Interest tab.
  • Make sure the loan becomes cash paid, by changing the Method to Cash on the Loans - Payment tab. If the original payment method was a payroll loan payment, delete the payroll information on the Member Payroll Maintenance dialog box.
  • Make sure the Coverage Option fields for credit life and credit disability are changed to no coverage on the Loans - Insurance tab.
  • If the member has a loan payment transfer set up from savings or checking, delete the transfer on the Member Transfer File Information dialog box.
  • Make sure the Credit Limit field is blank or 0.00 on the Loans - General tab.
  • If an open-end loan, you may want to change it to closed-end loan on the Loans - General tab.
  • If the loan had a draw period expiration date, make sure the Draw Period Expiration Date field contains a date that has expired, so no more advances can take place.
  • If you want to prevent the loan from appearing on member statement, select the Exclude from Statement check box on the Loans - General tab.
  • If you want to exclude the member from late charges, select the Exclude From Late Charges check box on the Loans - Interest/Charges tab.
  • If you want to stop statement from being sent to the member, maintain the Mail Code field on the Stmts/Reporting/Notices tab.
  • If necessary, maintain the Special Comment Code field, Compliance Condition Code field, or Consumer Information Indicator field on the Loans - Credit Bureau tab.

Loans that remain on the system with a charge-off date will not be reported on the Delinquency Report 430.

Partial Loan Charge-Off

For a partial loan charge off, you can leave the full loan balance on Portico to be reported as a charge off. Change the Loan Status field on the Loans - General tab to C and update the Charge Off Date field on the Loans – Credit Bureau tab. If you do not update the Charge Off Date field on the Loans – Credit Bureau tab, Portico will update this date when you complete the Loan Charge Off dialog box. This will report the loan as a charge off with the full loan balance. Then, you can change the Charge Off Amount field on the Loans - Credit Bureau tab to the partial amount. When the credit bureau transmission is generated, Portico will report the charge off amount as the partial amount instead of the full loan balance. Once the amount is reported, you can (a) wait until loan balance is the amount minus the partial amount charged off and complete a journal voucher to bring the loan balance to 0.00 or (b) lower the loan balance to the partial amount charged off.

Variable Rate Index Processing

The Loan Charge Off dialog box will prevent you from performing a charge off if the original loan type is not a Variable Rate Index Processing loan type and the charge off loan type is a Variable Rate Index Processing loan type. If the original loan type is a Variable Rate Index Processing loan type and the charge off loan type is not a Variable Rate Index Processing loan type, all of the values in the Variable Rate Index Processing fields on the Adjustable Rate Information dialog box will be erased.

Payment on a Charged-Off Loan

To make a payment to a charged-off loan on the system, complete a normal loan payment using the Transactions tab. The payment credits the Loan Loss GL Account 719000 and debits the Vault GL Account 739100 if received via cash and check. If the payment is received by check, the Received GL is debited.

Reversing a Charged-Off Loan

If the charged off loan is reversed using the Reversals - Same Day Reversals tab:

  • The Payment Amount field on the Loans – General tab will revert to the original loan payment amount and the Charge Off Date field on the Loans – Credit Bureau tab will revert to blank.
  • The Charge Off Amount and Date fields on the Loans – Credit Bureau tab will revert to zeros or blanks.

If the charged off loan is reversed using the Loan Type Change dialog box, the Payment Amount field on the Loans – General tab and the Charge Off Date field on the Loans – Credit Bureau tab must be manually maintained by the credit union.

General Ledger Effects:

  • DEBIT 701XXX Loan principal general ledger account specified on the Loan Profiles - Account Information tab for charged-off loan type
  • CREDIT 701XXX Loan principal general ledger account specified on the Loan Profiles - Account Information tab for the loan type prior to the loan charge-off

Related Reports:

  • Non-Financial Transaction Register Report 030
  • Missed Payment Report 200

Teller Balancing Effects: The teller balancing effects are as follows:

  • Adds the transaction amount to the Transfers/JV amount field on the Balancing and Close tab
  • Adds one to the Transfers/JV count field on the Balancing and Close tab

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