Write Off a Loan
You can write off any loan for which the number of unpaid days exceed the write off suggestion days. For example, you may define a status called Repossess Collateral, to reclaim the collateral after a loan becomes delinquent. The loan write off can be done manually, and can also be automated.
When you write off a loan, the status of the loan contract changes to Closed-Written Off, and a charge-off transaction is created for the total outstanding amount. A charge off is a debt that has been determined as noncollectable by the lender. The charged off amount includes all outstanding dues on the loan contract till that date. If the loan was in Active-Bad Sanding status, any interest accrued for the outstanding payments on the loan is also added to the remaining interest in the charge off transaction. The charged off amount is updated in the Write Off GL account. For protect enabled loans, the additional reconciliation of protect fee and service fee received from investors is performed. For information on writing off protect enabled loans, refer to section Writing Off a Protect Enabled Loan.
A write off transaction can also be reversed like any other transaction, if required. This reverts the loan status to the pre-write off status and the amounts and balances to their original values.
When a loan is written off, any active Automated Payment Setups are disabled. To enable the creation of the automated payments, you need to either manually set up a new one or enable the existing one.
Prerequisites
The following are the prerequisites to writing off a loan:
Loan is in Active-Bad Standing, Active-Bad Standing, or a custom loan status.
The number of days past due are more than the write off suggestion days (for automatic write-off).
For steps to automate loan write off, refer to section Automating Loan Write-off.
For steps to manually write off a loan, refer to section Writing off a Loan Manually.