Charged-Off Loan off the System

Related Topics

Maintain a Charged-Off Loan

If your credit union decides not to keep your charged-off loans on the system, then we recommend you keep a sub-ledger to track the loan balances. Copy the account information, loan information, and loan payoff information before and after the loan is charged off. Then, complete the Adjustments – Loan Payment from General Ledger tab using in the Loan Loss GL account 719000.

Reporting the Charge-Off to the Credit Bureau

When you remove a charged-off from the system and want to report it to the credit bureau before the loan balance is brought to zero, you must complete several steps. Prior to bringing the loan balance to zero, the charged-off must go through a month-end cycle.

Before month-end, complete the following steps:

  1. On the Loans - General tab, change the Loan Status field to C.
  2. On the Loans – Credit Bureau tab, update the Charge Off Date field.
  3. Enter the charge off amount in the Charge Off Amount field on the Loans – Credit Bureau tab. The charge off amount will be reported in the credit bureau transmission and in the CHG OFF field on the 350 Report if the loan Status field is C - Charged off on the Loans - General tab and the Status Code field is 64 or 97 on the Loans - Credit Bureau tab.

Portico automatically displays codes 11, 13, 71, 78, 80, 82, and 84 in the Status Code field based on the loan payment due date. Portico automatically displays code 97 when the loan is charged off. The Status Code field is updated when the credit bureau transmission is produced at month-end. If any other account codes are used, Portico will not update this field. The Status Code field will update after two back-office cycles.

After month-end on or after the 1st of the month, complete the following steps:

  1. Complete a journal voucher entry to bring the loan balance to zero and perform any other file maintenance needed to the loan.
  2. Once the loan balance is 0.00, change the ECOA Code field on the Loans - Credit Bureau tab to 0.
  3. Change the Account Indicator field and Status Code field on the Loans - Credit Bureau tab to blank.
  4. Leave all other fields the same. Now, the loan will not be reported to the credit bureau as a paid charge off.

Payment on a Charged-Off Loan

To process a payment on a charged-off loan…

If the member has a deposit relationship with the credit union, deposit the payment to the member’s share account. Complete the Adjustments – Share Withdrawal to General Ledger tab using GL account number 719000. The system debits share GL account 901000.

If the member does not have a deposit relationship with the credit union, take the loan payment amount as cash or a check received and complete the Transactions – Teller Sales/General Ledger tab.

Putting a Charged-Off Loan Back on the System

To put a charged-off loan back on the system after it has purged, set up a new loan with a zero balance. Since the debit still exists in the Loan Loss GL account 719000, complete the Adjustments – Loan Advance to General Ledger tab for the loan balance.

If the loan has not purged, you can put a charged-off loan back on the system using the Loans – Credit Bureau tab. On the Loans – Credit Bureau tab change the Charge Off Date field to zeroes (000000). Since the debit still exists in the Loan Loss GL account 719000, complete the Adjustments – Loan Advance to General Ledger tab for the loan balance. If the loan is no longer a charge-off or you do not want to report it to the credit bureau as a charge off, remove any changes made on the Loans tabs or Closed Account File dialog box.