Skip to content

Principle Paid Charged Off-Collect Interest 1st?

Question: 
Once the principal is paid on a charged off loan, is it best practice to collect the interest first or any fees associated with the charge off?
Answer: 

by Randy Carey:

Charging off a loan does not alter the legal obligation between the borrower and the bank. All payments must be applied to the loan according to the legal obligation whether the loan is charged-off or not. All payments received, regardless of whether it represent principal or interest are credited to recoveries up to the amount of the original charge-off amount.

Answer: 

by Richard Insley:

...and it's hard to imagine any promissory note that calls for payments to be applied to principal ahead of interest and fees.

First published on 11/26/2017

Filed under: 
Filed under lending as: 

Banker Store View All

From training, policies, forms, and publications, to office products and occasional gifts, it’s available here:

Banker Store

hot right now

image description

Looking for effective, convenient training on a particular subject?

BOL Learning Connect offers more than 200 courses ON-DEMAND or on CD ROM from AML to Reg Z and every topic in between.

Search Topics