This question relates to Retail Credit Classification. I've always been confused about when to charge-off a loans when bankruptcy is involved that is reaffirmed. Retail Credit Classification says:
"If an institution can clearly document that the delinquent loan is well secured and in the process of collection, such that collection will occur regardless of delinquency status, then the loan need not be classified. A “well secured” loan is collateralized by a perfected security interest in, or pledges of, real or personal property, including securities, with an estimated fair value, less cost to sell, sufficient to recover the recorded investment in the loan, as well as reasonable return on that amount. “In the process of collection” means that either a collection action or legal action is proceeding and is reasonably expected to result in recovery of the loan balance or its restoration to a current status, generally within the next 90 days."
We do classify these loans, but at what point do you or are you required to chargge-off?
Any help would be appreciated.
Just working here until I get my letter from Hogwarts.