TITLE 38: FINANCIAL INSTITUTIONS
CHAPTER II: OFFICE OF BANKS AND REAL ESTATE
PART 355 STATUTORY BAD DEBTS

Section 355.10 Definitions

Section 355.20 Purpose

Section 355.30 Plan for Collection

Section 355.40 Documentation


AUTHORITY: Implementing Section 14(8) [205 ILCS 5/14(8)], and authorized by Section 48(6) of the Illinois Banking Act [205 ILCS 5/48(6)].


SOURCE: Adopted at 12 Ill. Reg. 10667, effective August 8, 1988; recodified from Chapter II, Commissioner of Banks and Trust Companies, to Chapter II, Office of Banks and Real Estate, pursuant to PA 89-508, at 20 Ill. Reg. 12645.

 

Section 355.10  Definitions

 

            "Act" means the Illinois Banking Act [205 ILCS 5] as now or hereafter amended.

 

            "Bad debt" shall mean all debts due to a state bank on which interest is past due and unpaid for a period of six months or more, unless the same are well secured and in the process of collection.

 

            "Process of collection" means the collection is proceeding in due course, either through legal action (e.g. judgment enforcement proceedings) or any other means expected to result in repayment of a debt (e.g., contacting a debtor or referral to a collection agency).

 

            "Well secured" means:

 

            secured by collateral in the form of liens on or pledges of real or personal property having a value sufficient to discharge the debt in full; or

 

            secured by a written guarantee of a financially responsible party.

 

Section 355.20  Purpose

 

Pursuant to Section 14(8) of the Act a state bank shall not pay dividends in an amount greater than its net profits then on hand without first deducting therefrom its losses and bad debts.  This Part establishes guidelines for determining when an obligation is well secured and in the process of collection.

 

Section 355.30  Plan for Collection

 

            A bank must have a written plan for collection of a debt setting forth the following:

 

a)         the reason for the selected method of collection;

 

b)         the procedures the bank must follow to effect the collection; and

 

c)         the expected date of repayment of the debt.

 

Section 355.40  Documentation

 

A bank must maintain in its files documentation to support its evaluation of the security for a debt (i.e. appraisal).  In addition, a bank must maintain progress reports on its collection efforts, noting and explaining any deviation from the written plan for collection.