[jira] [Created] (FINERACT-2148) new charge-off behavior with interest bearing loans

["Mihaly Dallos (Jira)" <ji...@apache.org>]

Mihaly Dallos created FINERACT-2148:
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             Summary: new charge-off behavior with interest bearing loans
                 Key: FINERACT-2148
                 URL: https://issues.apache.org/jira/browse/FINERACT-2148
             Project: Apache Fineract
          Issue Type: Improvement
            Reporter: Mihaly Dallos


{panel}
*As a* loan manager 
*I want to* suspend interest accrual or accelerate maturity
*in order to* account only income which will be actually realized
{panel}
h3. *Background and details:*

At the time of charge off there can be different options how to handle future interest income. Either calculating with 0 interest or make all future principal due immediately.  

_Setting_ for interest bearing products to be introduced:
 * Accelerated maturity 
 * zero interest

h4. Zero interest
 * Once a loan charges off, interest accruals must stop

 * The schedule should be adjusted to remove interest projections on future periods (after charge off)

 * The schedule should be adjusted to proportionally decrease interest on current period (where charge off occurred)

 * Once accounting entries have posted for charge off, no further interest accruals can occur on the loan

 * Any further debit / credit adjustments (chargeback) post charge off will also be immediately go through the charged off accounting treatment

 * Any repayment reversal before charge off will reverse/replay the charge off and would in effect increase the charged off principal and interest amounts

h5. Main elements:
 * Change schedule: future interest → $0

 * No accrual (job)

 * Transaction and validation of journal entries

h4. Accelerated maturity

When accelerate maturity to charge off date is set in a loan product and the loan is charged off:
 * New and final installment is created with due date of the charge-off date containing all future balance

 * Installments after charge off date will be removed.

 * interest pending till charge off date is added to the new and final installment

 * interest isn’t calculated for the new last and final installment

 * Accounting will adopt charge off

 * Relevant events sent. (account changed)



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