Writing Off a Loan Account (3)

Screen ID:

Screen Title:

Panel Number:

PLNWO-04

Write Off Loan Account

5721

Click here to magnify

Access this screen by after selecting, "Yes, I want to write off the loan." on the previous screen and using Enter.

Helpful Resources

Visit Show Me the Steps for easy instructions on how to use CU*BASE to complete a write off/charge off.

Write-Off/Charge-Off Tools booklet.

Screen Overview

When a loan is no longer making money for the credit union or cannot be considered an asset to the credit union, you can “write off” the loan against the allowance reserve account. This is a contra-asset account that represents funds used to offset anticipated loan losses (commonly G/L account 719.00). Writing off a loan does not alter, delete, or in any way change the contract or release the member from his or her obligation to repay the note; it simply reclassifies the loan as a non-income-producing asset.

Use this screen to record the details associated with the write-off. The Reason for write off and Write off approved by are required fields on this screen. Use the lookup next to Reason for write off to access a screen where you can select a configured write-off/charge-off reason codes. Learn more about Write-off/Charge-off Reason Codes.

This screen is where you are required to make decisions:

What do you want done with the statements?
Do you want to market to the member again?
Has the payment matrix changed to match policy?
Do you report to bureau and do you need to add additional codes?
What (from the list you created earlier) is the reason for the loss?
On what date was it approved by the board?

The dates that follow are optional but important. They allow you to start collecting information on your losses that pertain to those who are bankrupt, those who were sued, and those who have collateral sold already. Since write-offs do not have a monthly due date, the Fine amount field is defaulted to 3 to stop further fines. This is also where you decide to report to the bureau (you should) and add any additional codes. These fields are optional but important to prevent disputes.

You can add comments that will be associated with this loan. These comments can then also be viewed when the loan is written off, when it is charged off, and from the Write-off/Charge-off History and Inquiry screens.

Once you have filled in the details on the third screen, click the Write Off Loan button to advance to the confirmation screen.

NOTE: If you are writing of a variable rate loan, you will first advance to a screen informing you that the variable rate records for the loan will be deleted. Use Add/Update (F5) to advance to the confirmation screen.
IMPORTANT NOTE: Once the loan confirmation screen is accepted using Add/Update (F5), a snapshot of the data on this screen is captured and saved to the LNWRTOFF file. This data can be viewed on the Write-off/Charge-off dashboard and the Write-Off History screen. View an outline of the file in the Write-Off/Charge-Off Tools booklet.
NOTE: If Add additional comment to tracker note is checked, you will then advance to the Tracker Review screen where you can add an additional personalized tracker conversation in addition to the system-generated one that is created at write off.
NOTE: Check the "Add member to blocked persons list" to add this member to your credit union's new membership fraud block list. (The member's SSN, type, and a comment will be added. The comment will include the date of the write off.) Also referred to as a “Fraud Alert” list, this database allows you to record names and, if known, SSNs of individuals for whom membership should be denied. It can also serve as a flag that additional verification of a person's identity may be required before opening a membership. You can also add a person to the Blocked Persons list by using Tool 892 Update Fraud Alert/Blocked Persons List. (Learn more by clicking the previous link.)
NOTE on writing off credit card loans: If the loan you are writing off is a credit card loan use the Card Status (F9) button to access the Credit Card Maintenance screen where you can close the card or perform other maintenance on the card.
NOTE: If the loan is a variable rate loan, an additional confirmation screen will appear notifying you that the variable rate records for the loan will be deleted. Click Add Update (F5).

Several things happen when a loan is written off:

Learn more about the process a loan goes through when it is written off.

Field Descriptions

Account #	The member’s account and loan suffix and the member's full name.
Written off to Loan Category	This field shows the new loan category that will be used when this loan is written off. The loan category number will be included since more than one category can be configured to write off loans.
Statement mail group	This field is used to assign this member to a statement group, based on how you want statements to be handled. A common reason for assigning a Statement Mail Group is to prevent statements from being mailed to charged-off members. Therefore, enter the code you have configured for charged-off memberships. Click the lookup button $images\magnifyingglasslookup_shg.gif$ to display a window showing a list of available codes. These codes are configured using the Statement Mail Group Configuration. To prevent statements from being mailed to this member, choose the Statement Mail Group code that has been configured for charged-off members.
3rd-party marketing opt out	Leave this box checked to exclude members from marketing and solicitation third party emails and marketing communications, which might include special rates or promotions.
CU contact opt out	Leave this box checked to exclude members from credit union generated emails and marketing communications that might be educational in nature, such as information about a better certificate rate or loan rate offering, which might include special rates or promotions.
Payment Matrix Priority	This shows the payment matrix priority for the following items before and after the write off: fine amount, interest due, principal, escrow, and Misc. G/L Processing.
Reason for write off	(Required field) Use the lookup to select the appropriate write off code. Write off and charge off codes are configured via Tool #1007: Write-off/Charge-off Code Configuration. (These are separate from the Membership and Account Reason Codes typically used when opening and closing memberships and accounts.)
Approved at board mtg on	(Required field) Enter the date of the board meeting when this write off was approved.
Write off approved by	Use the lookup and select an Employee ID responsible for approving the write off.
Bankruptcy date/Type	Enter the date of the bankruptcy. The "Type" field allows you to enter a free form text, such as "Chapter 7." Both fields can be overridden when the loan is charged off.
Judgment amount	Enter the amount of the judgment.
Judgment obtained on	Enter the date the judgment was obtained on. (This field can be overridden when the loan is charged off.)
Collateral liquidation date	Enter the date the collateral was liquidated on. (This field can be overridden when the loan is charged off.)
Estimated recovered amt	Enter the estimated recovered amount of the collateral. (This field can be overridden when the loan is charged off.) Will CU*BASE keep track of daily loan interest even after a loan has been written off? I noticed a value in the "Int accrued since write-off" field on a written-off loan, but that amount doesn't match what I would have expected, since this loan was written off a few years ago. What is the calculation for "interest accrued since write-off" on written-off loans?
Total collection expenses	Enter the total collection expenses
Total other fines/fees	Enter the total fines and other fees.
Report to credit bureau	Indicates whether or not the loan is reported to the credit bureau(s). IMPORTANT: If this loan account represents a credit card in collections, this flag should NOT be checked. Since the credit card balance also resides at your credit card processor, this avoids duplicate trade lines from being reported on the member's credit bureau report. IMPORTANT: This flag should be left unchecked if this member or any of his co-signers do not have valid SSNs, or if there are duplicate SSNs for any of the co-signers. Invalid SSNs may cause the credit bureau to reject the entire tape of loan information (for all online credit unions). Refer to the CU*BASE Standards for Social Security Numbers document for details.
CB comments	These two 1-character fields are used for Credit Bureau reporting purposes. Click the lookup button $images\magnifyingglasslookup_shg.gif$ to choose from a list of valid codes. NOTE: If you wish to enter a 2-character code, enter the first letter into the first field, and the second letter into the second field. Click here for a list of valid codes.
Status	This is used to report the status of the loan account as it relates to credit bureau reporting. Click the lookup button $images\magnifyingglasslookup_shg.gif$ to choose from a list of valid codes. If this field is left blank (00) and the account is delinquent, CUBASE will determine the appropriate numeric credit bureau code (71 through 84) to be reported. However, if you wish to override the code calculated by CUBASE, you may enter a valid status code here and it will be reported instead. Click here for a list of valid codes.
Consumer information indicator	Use this to report the member's bankruptcy status, or to change/remove a previously-reported bankruptcy status. Click the lookup button $images\magnifyingglasslookup_shg.gif$ to choose from a list of valid codes. Click here for a complete list of codes. NOTE: This indicator is a little different from the others. You only need to report a bankruptcy indicator once. But if you wish to remove a previously-reported bankruptcy status for a member, you must enter one of the designated removal codes. Leaving the field blank does NOT remove a previously-reported bankruptcy code.
Compliance condition code	Use this code when reporting consumer disputes and other conditions it compliance with the Fair Credit Reporting Act (FCRA).
Add additional comments to tracker note	Check this box if you would like to add an additional note to the member's Collections Tracker in addition to the system-generated one. After the loan is written off, a Tracker conversation window will open allowing you to enter an additional comment. This Tracker will use the Memo Code configured on this screen.
Add member to blocked persons list	Check to record member's name and SSNs on the Blocked persons list which is used to to deny a person a membership at your credit union. This action can also be done via Tool #892. Learn more. Overview: Fraud Block Lists How does the new membership denial of service fraud block list work? Is the employee blocked from opening a new membership for the member? What happens when a match is made to an entry on the new membership denial of service fraud block list?
Exclude from dormancy	There are situations where you may wish to exclude a membership from being monitored for dormancy after it is written off. Check this box to exclude this membership from being monitored for dormant status or assessed any fees after the loan is written off. (This will exclude this member from being declared dormant, regardless of transaction activity after it is written off.) SEE ALSO:CU*BASE Dormancy and Escheat Monitoring NOTE: This selection is not included in the LNWRTOFF file)
Delinquency fine control	Use the lookup to select a delinquency fine code. These are configured here.
Freeze code	Select a freeze code. Learn more here.