Delinquency, Collections, and Loan Status

Chinese source: 逾期、催收与贷款状态 Locale: en-US Audience: Internal learning

Concept

Delinquency occurs when the borrower does not pay the full amount due by the contractual due date. It affects penalty interest, compound interest, collections, risk classification, allowance, credit reporting, and future credit decisions.

Collections are the bank's actions to remind, negotiate, recover, litigate, or realize collateral.

Delinquency Recognition

The system usually determines delinquency from the repayment schedule:

Due date reached and not fully paid -> delinquency

Actual rules may be affected by grace periods, batch debit timing, holidays, auto-debit retries, and policy settings.

Delinquency Measures

Measure	Meaning
Days past due	Number of days since the unpaid due date.
Past-due installments	Number of installments not fully paid.
Past-due principal	Principal due but unpaid.
Past-due interest	Interest due but unpaid.
Penalty interest	Additional interest on delinquent or defaulted amount.
M1/M2/M3	Aging bucket or collections stage.

Status Migration

flowchart TD
  A["Current"] --> B["Delinquent"]
  B --> C["In Collections"]
  C --> D["Restructured / Extended"]
  C --> E["Legal / Collateral Action"]
  C --> F["Charged Off"]
  B --> G["Delinquency Cured"]
  G --> A

Collections Actions

Action	System Focus
SMS or phone reminder	Contact time, result, operator.
Auto-debit retry	Debit account, order, failure reason.
Manual collections note	Follow-up content, promise-to-pay date, attachments.
Extension or restructuring	Whether agreement, schedule, and rate are regenerated.
Legal or collateral action	Litigation status, collateral disposition, guarantee payment.

Risks

Risk	Explanation
Grace-period rules are unclear.	Delinquency recognition and disputes become messy.
Auto-debit failure is not retried or logged.	Customer responsibility and operations cannot be proven.
Delinquency cure is inaccurate.	Collections, credit reporting, and risk classification are wrong.
Collections notes are incomplete.	Legal action and audit evidence are weak.

Related Topics

Topic	Use
Repayment Schedules and Installment Breakdown	Understand which installment became past due.
Interest Accrual, Billing, Penalty Interest, and Compound Interest	Understand penalty and compound interest.
Loan Risk Classification and Allowance	Understand risk consequences.