Version 1.0
Prepared by: @Lorraine Sebata
Approved by: @Lashanda Mackey
Reviewed date: 2025-09-04
Next review date: 2026-09-04
This policy applies to all loan products offered by Easyterms and to all employees, agents, and third parties involved in the monitoring, collection, and charge-off processes of delinquent loan accounts.
This Loan Charge-Offs and Collections Policy establishes the principles and guidelines for managing delinquent loan accounts, initiating charge-offs, and pursuing collection efforts at Easyterms. Its purpose is to minimize credit losses, maximize recovery rates, ensure fair and consistent treatment of clients, and maintain compliance with all relevant regulatory requirements.
This policy applies to all loan products offered by Easyterms and to all employees, agents, and third parties involved in the monitoring, collection, and charge-off processes of delinquent loan accounts.
The company shall implement robust systems and procedures for the timely identification of delinquent loan accounts, with a focus on accounts exceeding a specified threshold (e.g., $2,000.00 outstanding balance). Special attention will be given to high-risk categories such as retired clients, deceased clients, and rewritten loans.
A systematic approach to communicating with delinquent clients shall be maintained, ensuring clear, concise, and empathetic communication regarding overdue balances, repayment options, and available settlements. Communication channels will include phone calls, emails, and formal written notices.
For specific client categories (e.g., retired, deceased), thorough verification of their status through official documentation and external checks shall be conducted to determine appropriate collection or resolution strategies.
The company is committed to engaging with delinquent clients to explore flexible repayment solutions, including customized payment plans, discounts, or settlements, aimed at facilitating recovery while considering the client's financial circumstances. All agreed terms must be formally documented.
Rigorous follow-up procedures and detailed communication logs shall be maintained for all collection activities. Regular reviews will be conducted to monitor repayment plan adherence and overall collection effectiveness.
Legal action will be considered as a last resort for unresponsive clients or those who refuse to honor their obligations. Decisions to pursue legal action will be based on a comprehensive evaluation of the debt amount, account history, and available documentation, in consultation with legal counsel.
Loans will be charged off when they are deemed uncollectible, typically after a specified period of delinquency (e.g., 90, 120, or 180 days past due) and after all reasonable collection efforts have been exhausted. Specific criteria for charge-off will be defined in the accompanying SOP.
Comprehensive records of all collection activities, client communications, status verifications, repayment agreements, and charge-off decisions shall be maintained in accordance with regulatory requirements and internal policies.
Board of Directors / Senior Management: Overall responsibility for approving and overseeing the Loan Charge-Offs and Collections program.
Collections Department / Loan Officers: Responsible for the day-to-day monitoring of loan accounts, communication with delinquent clients, negotiation of repayment plans, and execution of collection strategies.
Legal Counsel: Advises on legal action, prepares demand letters, and initiates court proceedings when necessary.
Collections Department: Provides support in assessing client financial status for repayment negotiations and evaluating accounts for potential charge-off.
Responsible for processing charge-offs and maintaining accurate financial records related to delinquent accounts and recoveries.
This policy will be reviewed at least annually, or more frequently if there are significant changes in laws, regulations, business operations, or identified risks related to loan collections and charge-offs.