Just want to confirm my thoughts on this . . . Wire transfer came in to an account that has been closed and sent to collections. However, that same customer has a past due loan with us. I don't think we can take those funds and apply it to the loan, we need to return the wire, correct?

A wire to a closed account gets returned. Period.

When you charged off the account, you also terminated your contract with your customer for accepting deposits. No active contract equals no seetoff rights in the now cancelled contract.

As Randy notes, the wire goes back (as would an ACH or any other method of deposit to the account.)