How to Handle Past Due (Delinquent) Loans

This article will cover how to handle Past Due (Delinquent) loans with more than one pay period late in Bryt. It's ultimately up to your preference but you should review this to ensure you understand how to manage these loans in Bryt. 

1) $0 Payment Method - The first way you may consider loans that are past due would be to record $0 payments once the period's been passed. You would record a $0 payment for a period once the second unpaid period's due date rolls around and record a Paid On date that meets the grace period's requirements to charge a late fee (that is, if you want to charge a late fee). If you don't want to collect a late fee for whatever reason, then you can record the $0 with a Paid On Date matching the first unpaid period's due date. Using this method, you are more accurately charging interest on the loan's dues because unpaid periods will result in a higher principal balance over the life of the loan.
Example: For a loan with a closing date of 1/1/24, the first due date is 2/1/24 with a grace period of 10 days. To incur a late fee, you'd record a $0 payment with a Paid On Date of 2/12/24 - the late fee would be added to the loan's summary as a [Outstanding] Late Fee Balance. Note that grace period days start the day after the due date and the fee isn't charged until the last grace period day has passed, so you may want to change the number of grace period days to 8 so the late fee is reflected as of 2/10/24. Otherwise, you can record the Paid On Date as of 2/1/24 if you prefer not to charge the late fee. 

Unpaid Categories: Impound/Escrow and Principal amounts that are underpaid are not tracked.
- If you are using the Impound module, you'll want to add a new Impound fee to make up for unpaid dues.
- For Escrow Analysis module users, you'll want to raise the collection amount on a future pay period and reset it to a lower amount on the following pay period.
- For unpaid principal, we do not track amounts unpaid here since this is what is truly happening, where interest per diems are reflected given the unpaid principal balance amount. On fully amortized loans where your preference is honoring the original pay period's dues, you'd want to reference the following 'Open-Ended Method' option.

Note: Using this method, the system will currently reflect it as 'Current'. You may want to create a custom user field to track the number of days late. We plan on enhancing the system to better address delinquent loans in the future. 
Report: This method would correspond to the 'Loan Balances' report under the reports tab since this will set unpaid amounts to their Outstanding balance categories for Interest, Late Fees, and Lender Fees (we would custom create this lender fees inclusive report for your tenant).

2) Open-Ended Method - The second way is to leave the loan's scheduled pay periods open-ended (recording no payments as a loan's pay periods are unpaid), without recording $0 payments. This method is less accurate because you'll be under-collecting interest for the unpaid principal dues accumulated in elapsed periods since you're honoring the original period's dues, whereas with the $0 payment method, a higher principal balance yields more interest as the loan remains unpaid. 

Report: This method corresponds to the two 'Aging Reports' under the Reports tab. Using this report you can quickly tell how much the borrower owes you and get their schedule dues back on track. 

What about accepting Partial Payments? You can also record partial payments using similar logic for both methods above. You'll want to consider two options outlined below for partially paid amounts.
1) The first option is to leave principal dues unpaid to charge more through interest per diems over the life of the loan, this is the default that Bryt's waterfall rules apply. 
2) The second option is paying off principal dues first and leaving interest unpaid via the 'Enter Manually' button option and setting interest as underpaid to set it as 'Outstanding Interest'.
For both of these scenarios, you should aim for Impound/Escrow dues to be paid first as it'll be less of a hassle for you to re-add later to make up for those underpaid amounts (if they are not paid within a period, those dues are foregone and need to be readded/recalculated).