# Charge off, update details, and reverse charge-off

Charging off a loan writes it off as bad debt. This is typically done after a borrower has been past due for an extended period (commonly 120–180 days) or in specific circumstances such as bankruptcy. For lenders whose loans Peach reports to the credit bureaus, Peach reports charged-off loans based on the reason you select, so choose the reason carefully. If the charge-off was applied in error, you can reverse it.

**Availability:** All clients
**Required permissions:** `loan:chargeoff` (to charge off); `loan:update` (to update details); `loan:chargeoff.reverse` (to reverse)
**Loan status:** Charge off requires `active` or `accelerated`; Update and Reverse require `chargedOff`
**Loan types:** Installment loans and lines of credit, not individual draws 

## Before you begin

- Charging off a loan negatively affects the borrower's credit history and credit score. Verify that the charge-off is appropriate before proceeding.
- Loans are typically charged off automatically. Daily Loan Maintenance (DLM) charges off an active or accelerated loan when its days overdue reach the loan type's charge-off threshold. It does so only when no non-due, due, or overdue balance remains after acceleration. Manual charge-off is for cases that require earlier action, such as an approved bankruptcy.
- Agents can still select **Make payment** on a charged-off loan, unless a debt collection agency services the loan. Use **Manage payments** to handle transactions on charged-off loans.


## Charge off a loan

1. From the agent-view Borrower Portal, open the loan and select the options menu > **Charge off**. The options menu label uses the loan's asset name, for example **Loan options**, or **Account options** when the loan has none.
2. Review the current loan balance displayed on the form.
3. Leave **Effective date** set to today. The date picker allows dates from the loan start date through today, but Peach accepts only today's date.
4. Select a **Charge Off Reason** from the dropdown.
5. **Send notice to borrower** is checked by default. To skip the borrower notice, clear the checkbox.
6. If your company requires a Case ID, select a case from the **Case ID** dropdown. See [Global behaviors — Case ID requirement](/servicing-operations/agent-only-tools/agent-tools-overview#case-id-requirement).
7. Select **Charge off**.


The loan status changes to `chargedOff`. The charge-off appears in the borrower's Activity view. For lenders whose loans Peach reports to the credit bureaus, Peach reports the charge-off according to the reason you selected.

### Charge-off field reference

| Field | Description | Required | Values / Format |
|  --- | --- | --- | --- |
| **Loan balance** | The loan's outstanding total across all balance states (`outstandingBalances.outstandingTotalAmount`). | — | Read-only display |
| **Effective date** | The date the charge-off takes effect. | Yes | Date (default: today). Peach accepts only today's date. |
| **Charge Off Reason** | The reason for the charge-off. Peach uses this for credit bureau reporting, for lenders whose loans Peach reports. The reason also decides whether Peach sends the borrower notice. | Yes | Select: Term, Fraudulent, Bankruptcy, Legal |
| **Send notice to borrower** | Sends the borrower a notice about the charge-off. Peach sends this notice only for the **Term** reason. | No | Checkbox (default: checked) |
| **Case ID** | The case associated with this action. | Conditional | Select from **Open cases** or **Closed/canceled cases**. Required when `forceCaseIdOnAgentActions` is enabled. |


## Balance changes after charge-off

When Peach processes a charge-off, it moves the loan's non-accrual balances to charged-off (`chargedOffBalances`), membership fees included. If the loan is still `active`, Peach accelerates it first, which moves its balances to non-accrual.

Peach moves balances only when no non-due, due, or overdue balance remains. If one remains, the balances don't move. If DLM finds one, it doesn't charge off the loan, and the loan stays `accelerated`.

When an agent charges off a loan, the status changes to `chargedOff` and the form shows success. Peach moves the balances afterward. If a non-due, due, or overdue balance remains, the loan stays `chargedOff` and the form still shows success, but the balances don't move.

## Update charged-off details

After a loan has been charged off, you can change the charge-off reason. Use this if the original reason was incorrect or if circumstances have changed.

1. From the agent-view Borrower Portal, open the charged-off loan and select the options menu > **Update charged off details**.
2. Select a new **Charged off reason** from the dropdown.
3. Select **Update**.


### Update details field reference

| Field | Description | Required | Values / Format |
|  --- | --- | --- | --- |
| **Charged off reason** | The updated reason for the charge-off. | No | Select from charge-off reason options |


## Reverse charge-off

If a loan was charged off by mistake, you can reverse the charge-off to return the loan to `active` status. 

1. From the agent-view Borrower Portal, open the charged-off loan and select the options menu > **Reverse charge off**.
2. If your company requires a Case ID, select a case from the **Case ID** dropdown. See [Global behaviors — Case ID requirement](/servicing-operations/agent-only-tools/agent-tools-overview#case-id-requirement).
3. Select **Reverse charge off**.


The loan status changes to `active`, even if the loan was accelerated before the charge-off. 

Important
After you reverse a charge-off, DLM can accelerate the loan again first and then charge it off. DLM can do this as soon as the next daily run, once the loan's days overdue reach the loan type's thresholds. Both steps can happen in one run. DLM charges off the loan only when no non-due, due, or overdue balance remains.

## Related pages

- [Agent-only loan tools](/servicing-operations/agent-only-tools/agent-tools-overview)
- [Accelerate and reverse acceleration](/servicing-operations/agent-only-tools/agent-tools-accelerate)
- [Manage credit reporting](/servicing-operations/agent-only-tools/agent-tools-credit-reporting)