Change payment plan
It could happen
that a borrower has a change in circumstances and as a result they are not able to pay on the same date as when they first took out the finance agreement. As a
result they will go into arrears every payment period.
A change payment plan
can be created where the instalment dates and the associated payment dates for the finance agreement can be shifted
for the remainder of the term. The capitalisation dates however do not change, they will continue t take place on the dates as setup when the finance agreement was created.
When a change
payment plan is created the balance that is used to calculate the payments is
the sum of all the investor balances less the sum of all the uncleared balances
on the investments. This is important as it assumes that any payments that have
been made and are uncleared at the time of the change payment plan being
created, are treated under the assumption that they will clear.
If a borrower
changes the date of instalments by creating a change payment plan, and the
borrow later decides to return to the original instalment dates, a new change payment
plan will need to be created.
A change payment plan may not be created:
- on a finance agreement that has an active promise to pay payment arrangement in place. This is due to the fact that:
- a payment arrangement involves detailing future payments that have been agreed with the borrower. Based on these new or modified payments calculations have been done to alter future payments. Creating a change payment plan on top of this would completely modify all the calculated future payments and they will no longer be as per what was agreed with the borrower and as such could result in the payments dishonouring.
- The rule for a payment arrangement is if a payment is not made as agreed, the payment arrangement will be broken and payments will return to how they were prior to the payment arrangement being activated. If a change payment plan was created on top of this then it too would be broken and all future instalments would be incorrect
- on a finance agreement that applies "simple interest"
1. To create a change payment plan on a finance agreement, navigate to Home pages -> Borrowing -> Finance Agreements
2 Use the filter options to filter the finance agreement that you need to apply the changes.
3. Once you have selected the finance agreement from the list there will be 2 options to create change payment plans:
- Change Payment Plan - this will change all future instalments on the finance agreement
- Change Payment Plan for a Period - will change future instalments during a specified date range
The rest of this article will deal with the "Change Payment Plan" option
5) You will be presented with a page where you will be able to supply the dates the instalments must move
6) Calculating the details on a change payment plan results in a large amount of work that needs to be done as a finance agreements can have multiple investments that are fractionalised and each one of them needs to be altered and have earnings schedules and amortisations modified as per the new instalments. In order to prevent you from having to wait while all the calculations are done, it will be completed in the background so you can continue to do other work. While the calculations are being scheduled and completed in the background, you will be presented with a "notification" that details the calculations are in progress. See here for details on notifications
Once complete the notification will no longer appear on the screen and you will be able to "activate" the change payment plan.
7. Once a change payment plan is saved it will have a status of "Quote". Any change payment plan with this status indicated that it is still under review and has not been finalised. While in this status the change payment plan can be edited and modified.
8. Only once a change payment plan is activated, the new instalments will be applied to the finance agreement.
Note that change payment plans take time to generate and as a result will run in the background. Change payment plans activate will appear in the change payment plan maintenance queue where the progress can be monitored. While the change payment plan is being generated in the background, the details will also appear on the home page under the notifications, for the user who activated the change payment plan. see here for details
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