We have a customer who filed for Chapter 13. Once we get the notice are we supposed to stop accruing interest on the loan? We have a repayment plan in place from the bankruptcy court but it won't be enough to repay the loan if we continue to accrue interest.

There is no hard and fast rule that I know of. With that knowledge I would not accrue, why accrue what you know you won't get? Then write it off later?

If they don't have a repayment plan with the court or have a re-affirmation agreement we stop accruing. I would rather book extra income later than explain why I accrued interest on an account we knew we wouldn't recover on.

Just MHO, hopefully a GURU will put their 2 cents in too.

What are the stipulations of the repayment plan. Was the principal crammed down? At what interest rate does the loan now accrue at under the plan? You may have to charge-off the difference.

I believe at the time we received the repayment plan, that the payoff on the loan was roughly $2,500 and the repayment plan listed a balance of $2,600. There was no mention of an interest rate.

Plus I should also mention that the repayment plan is a 54-month plan and we will start getting payments in month 36. So it's about $1,300 in accrued interest from now until the loan is paid off. There is a cosigner so we are trying to collect from them for the difference.

Sounds like the loan should be charged-off and any monies eventually received taken into recovery.