@Anonymous wrote:
Hi Kree:
What I was suggesting is based upon the Accounting Best Practices, Fifth Edition by Steven M. Bragg; Accounts payable best practices, Credit and Collections Best Practices found online at http://www.untag-smd.ac.id/files/Perpustakaan_Digital_1/ACCOUNTING%20Accounting%20Best%20Practices.pdf It basically states that the “outstanding interest and late fees (if applicable*) must be paid first, prior to a payment being applied to the loan principal.” This would mean that the first late month is 30 days late. In my case I stated that the next month they made a monthly payment minus $1. Now excluding late fees (which I did not mention but we all know apply), after the second month the borrower still owes $1 principle for the first month – thus 60 days late on month 1 and 30 late on Month 2. I agree that since I only used $1 dollar it would take a while to get to 90 days late without late fees; but most people do not pay all their payment less $1 per month. In reality if they only paid 75% of their bill and accumulated the normal late fees; depending on the interest rate and type of loan (CC differ from installment auto loans under the rules of 7/8) they would probably see something like 30, 60, 60, 60, 90, late (or 30, 60, 60, 90, 90 late) over a 5-month period. Fundamentally, unless they pay everything off (including any fees) in one billing cycle it is possible for the lates to remain for a while; but more likely it will increase initially slowly but rapidly expanding.
Y
You know what, I think the issue is that I dealt with property, not credit. I might have been incorrectly applying practices in a specific industry to accounts in general.
