Question:
The Credit Reporting Resource Guide (CRRG) suggests that a partial charge-off be listed as a separate account with a new account number when the customer is liable for the partial charge-off amount. From an operational standpoint how would the payments be applied to the loan/loans and what is a good practice to ensure we collect all payments on both loans and not advise the consumer that the loan is paid off?
Example: On a $50,000 original note (Ln#123) amount. We charged off $10,000, leaving 40,000 still owed. The customer is current on his payments on the remaining $40,000.
According to Metro 2, they want us to lower Ln #123 to $40,000 and report a new loan #456 as a $10,000 charge-off.
How do you ensure that you don’t release the collateral until both loans are paid off?
Is there another way to report partial charge-off?
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