California Code of Regulations
Title 10 - Investment
Chapter 1 - Commissioner of Business Oversight, Division of Financial Institutions
Subchapter 40 - Industrial Loans
Article 4 - Reserves
Section 40.401 - Charge-off of Receivables

Universal Citation: 10 CA Code of Regs 40.401

Current through Register 2024 Notice Reg. No. 38, September 20, 2024

(a) Receivables in default shall be charged to the reserve for losses if they fall within the following classifications:

(1) Accounts repayable monthly on which no full monthly contractual payments have been made within the past 180 days, unless the borrower has filed a petition under either Chapter 11 or Chapter 13 of the Bankruptcy Code and the plan provides for payment of the account.

(2) Accounts repayable at maturity by a single payment which are not paid in full within 180 days after the maturity date of the account.

(3) Accounts repayable by other than monthly payments or a single payment on which no full contractual payment has been made within 180 days from the due date of the first past due and unpaid installment.

(4) Accounts which the industrial loan company has recognized as uncollectible.

(5) Flooring account balances which are unpaid 90 days after maturity or on which no agreed curtailment payment has been made within the past 90 days.

(6) Factoring account balances which are unpaid 90 days after maturity or on which no contractual payment has been made within the past 90 days.

(b) If an account is secured by real property and its status places it in a charge-off classification, the amount charged to the reserve for losses may be reduced by the value of the real property less estimated costs of sale and any senior encumbrances.

(c) Receivables shall be reviewed at least once each month and accounts subject to charge-off under this section shall be charged to the reserve for losses not later than one month following the date of review.

(d) If a company is able to satisfy the Commissioner that facts exist concerning an account which justify a smaller charge-off than provided in this section, such charge-off may be reduced or eliminated as determined by the Commissioner.

1. Change without regulatory effect renumbering former section 1141 to new section 40.401 filed 8-19-97 pursuant to section 100, title 1, California Code of Regulations (Register 97, No. 34).

Note: Authority cited: Section 18347, Financial Code. Reference: Section 18343, Financial Code.

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