The purpose of this policy is to set forth procedures to be followed in the collection of delinquent loans or other obligations owed to the Credit Union.

1. Loan Delinquency.

1. Computer generated delinquent notices will be created on the 16^th and last day of the month and mailed based on the following schedule:

1. Past due 16 to 30 days - a "friendly reminder" notice.
2. Past due 31 to 60 days - a "Attention payment past due" notice.
3. Past due 61 or more days - a "Delinquent Payment Notice."

2. A computer generated delinquency report will be printed on the 16th and last day of each month. Totals will be used when reporting to the board of directors and various governmental agencies. Individual loans will be shown under the following delinquent categories:

1. Past due 0 - 2 months (16 to 60 days)
2. Past due 2 - 6 months (61 to 180 days)
3. Past due 6 - 12 months (181 to 365 days)
4. Past due 12 months or more (366 or more days).

3. ** It is noted that the VISA and MASTERCARD credit card delinquencies are processed on a different computer system, and that statements are prepared by Certegy on a monthly basis which are then mailed to the members. Delinquent credit card accounts will be reported to the Board on the same Delinquent Report as other loans. The credit card categories will be created as follows:

1. Past due 5 & 30 days: not shown on the Delinquency Report.
2. Past due 60, 90, 120 & 150 days: shown in the 2 - 6 month category.
3. ** Past due 180, 210, 240, 270, 300, 330 & 360 days: shown in the 6 - 12 month category.
4. Past due 390+ days: shown in the over 12 months category.

Although the above days do not match exactly to the category time periods, the computer limitations prohibit a more exact disclosure.

4. The manager or the manager's designate will be known as the Collection Officer. He/She will monitor delinquency on a regular basis.

5. The Collection Officer is authorized to telephone or send personalized collection letters in lieu of or in addition to the standard computer generated notices. Phone calls or letters can take the form of just a "friendly reminder" to official notice of stronger collection efforts. Immediate payment can be demanded or time frames can be granted. The Collection Officer will exercise good judgement in protecting the credit union assets and collateral. Documentation must be retained for each collection effort.

6. The Collection Officer will initiate collection efforts by legal means if reminder notices, letters, telephone, person-to-person efforts fail to resolve delinquency. Such action needs prior board approval, unless in the judgement of the Collection Officer, collection of the loan would be materially jeopardized by strict compliance with this policy. Legal means shall include turning the file over to an attorney for collection, repossessing collateral, notifying co-makers of their obligation, etc.

2. * Collection Items.

1. Paper or electronic items presented to the Credit Union for payment, deposit or cash will be accepted immediately as if the item were cash only in accordance with the Credit Union's Funds Availability Policy.

2. ** The Credit Union will charge the member $10 for each item returned for a non-sufficient funds (NSF) reason. NSF items will automatically be re-deposited a second time for collection. Should the item be returned a second time, the member's account will be debited as soon as possible for the amount of the item. If a loan payment was made with the returned item, the payment will be reversed. Shares will be withdrawn for any deposited or cashed item. The manager or designate will use any available legal means to collect such items.

3. ** Loan Charge-offs.

1. The Board of Directors must approve all loan charge-offs. All approved amounts will be debited through general ledger #719.02.

2. Loans that have been worked through the delinquency process explained above, but are deemed uncollectable by Management, will be recommended to the Board of Directors for charge-off.

3. Loans that are uncollectable due to Chapter 7 bankruptcy will be recommended for charge-off as soon as possible.

4. Chapter 13 unsecured loans will be recommended for charge-off unless the borrower continues to make payments of sufficient amount outside the plan.

5. Chapter 13 secured loans will not be charged off until the borrower is dismissed (no longer making required payments) through the plan.

6. Management may dispose of collateral on secured loans first before actually charging off the remaining loan balance.

7. Discharged (paid in full according to the plan) Chapter 13 loans with residual balances will be charged off.

8. Loans that are charged off will cause the borrower to cease to be a member of this Credit Union. Borrowers can re-join only if they voluntarily repay an amount the Credit Union would have earned based on the following formula: (original loan principal plus amortized interest) less (total paid principal plus total paid interest).

9. After a loan is charged off, Management will continue to seek to collect those funds by turning over necessary information to an attorney to pursue collection efforts.

 

Revised September 28, 1988
Revised October 26, 1988
Revised June 23, 1994
Reviewed April 18, 1996
Reviewed August 20, 1998
Reviewed August 26, 1999
* Revised September 24, 2002
** Revised July 24, 2003
Reviewed March 16, 2005