credit management for cooperatives

04/18/23 merlene quiba flores. panabo city

Credit Management for Cooperatives

Credit Coop Business: PINOY Style

• Member puts in share capital because he intends to borrow.

• Share capital as source of funds.

• Acquisition of land and building not regulated.

• External credit is used to fill up the gap of low repayment and weak internal capital mobilization.

• Interest rates on loans not reasonably designed to meet cop’s income needs.

• Lending policy is not clear.

• Loan limit is based on capital share.

What is credit?

• Latin base “credo” meaning faith or trust.

• The ability of the debtor to obtain goods or services without an actual tender of payment.

• The transmittal of economic value now, on faith in return for an expected equivalent economic value in the future- (J. Allen Walker)

Purpose of Credit

• Productive purposes - to finance production activities of it’s member-borrower. (crop prod’n. livestock prod’n. & breeding)

• Providential purposes – Intended for non-productive purposes but provides for the emergency and providential needs. (health/medical services, educational)

Credit terms

• Short term – the borrower must pay the loan within one year or less.

• Medium or intermediate term – Loans payable in one year up to five years.

• Long term – loan payable for more than five years.

Credit repayment schemes

• Amortized loans – the principal and interest (fixed principal + interest payments)will be paid regularly weekly, monthly, etc.

• Single payment loans – principal and interest will be paid at one time and in full on the last day of the loan term.

• Discounted interest – automatic deduction of the full amount of interest from the total loan, principal is either paid in lump sum or installment during the loan term.

Why do we give credit?

• Because borrower had signed documents, promising to pay at designated amount and time.

What are the elements of credit?

• Trust or confidence

• Risks

• Period or term of payment

What are the basis of credit?

• Character

• Capital

• Capacity

• Condition

• Collateral

• (Connection)

Basic considerations in granting loans

• Borrower’s background - done through credit & background investigation with focus on the following factors: character, capacity, collateral, capital, conditions

Basic considerations in granting loans

• Co-maker’s background – equally important to be investigated. Some basic factors to consider are:

- Status of the co-maker: a co-maker must have good credit standing with the coop.

- Capacity to guarantee loans: a co-maker must have sufficient assets.

• Thoroughly evaluate co-maker’s capacity to guarantee loans.

Important lending processes/transactions

• Loan Analysis/credit Initiation

• Disbursements and documentation

• Collections/credit administration

• Monitoring and reporting/remedial management

Loan Analysis/credit Initiation

• The first step in credit process.

• Credit and background investigation is done.

• Written CIBI report should be complete and updated every six months.

• Evaluation and analysis of loan applications.

• Evaluation of credit/project proposals.

• Credit committee validation.

• Loan approval

Disbursements and documentation

• Necessary documents supporting transactions are complete.

• Loan agreements signed.

• Loan release-in accordance with disbursement procedures.

• Documents that provide basis for loan grant:

-Loan proposal

-Loan agreement

-Promissory note

-Collateral/securities documents

Collections/credit administration

• After loan release- coop to administer close monitoring of the borrower.

• Installation and maintenance of credit files.

• Loan Supervision

• Formulation & installation of Innovative collection scheme.

Monitoring and reporting/remedial management

• Coop institutes remedial measures to minimize loss & restore weak credits.

• Major activities:

- Problem identification and recognition

- Remedial measures

-Monitoring the implementation of remedial measures.

Functions of key staff in credit management

• Board of Directors -has over all responsibility of maintaining safe productive lending operations.

• Loan approval,formulation of policies.

• CRECOM – critical unit responsible for protecting the quality of coop loan portfolio.

• Evaluate, approve, recommend for approval.

• Recommend remedial actions to the manager.

• MANAGER –responsible for the day to day management of the coop operations.

• Organize and assign responsibilities to key management staff.

• LOAN OFFICER – responsible for undertaking the details of credit operations.

• Promotes coop services, analyzes and recommends for loan approval, maintains credit files.

Preventing Delinquent Loans

• Continuous orientation and education of members

• Installation of credit management systems prior to credit delivery

• Conduct of hones-to-goodness CIBI

• Close monitoring of loans/establish relationship with the borrower

• Provision for insurance

• Loan approvals and releases

The CREDIT FILES (Importance)

• Provide Crecom, Manger and key management staff with critical info regarding the borrower.

• Reference in support of the extension of credit to borrowers.

• Ensure smooth turn-over of functions.

• Professionalize lending operations in accordance with formal banking procedures and practices.

The CREDIT FILES (Contents)

• Record of coop’s past experience with the borrower,

• Credit facility proposal

• Background information

• Credit investigation report

• Titles on properties offered as collateral

• Project inspection reports

• Promissory notes

• Other relevant information such as business permits, registration documents

LOAN SUPERVISION

• Monitor progress of the project implementation that will enable the coop to determine potential problem/s arising from such accounts.

• Ensure that the terms and conditions of the loans are being complied with.

LOAN SUPERVISION

• Develop a credit relationship with member-

borrower to bridge the information gap for future credit decisions.

• Ensure prompt payment at maturity of the principal, accrued interest and other charges or expenses associated with the transaction.

LOAN SUPERVISION

• Ensure that the mechanism to generate available management options in improving collection of loan accounts includes legal deposition and execution of alternative plan of action including restructuring and refinancing in some cases.

MEASURING LOAN PORTFOLIO

LOAN PORTFOLIO – largest asset in a cooperative

Importance of portfolio management

• Enables financial institution to continue to provide a needed service

• Critical to the survival of a credit union

There is always RISK in lending money

3 critical challenges of Loan Portfolio Management

1. Measure and monitor the amount of risk in the portfolio

2. Understand the way the quality of the portfolio affects the institution’s INCOME

3. Find ways to manage the credit operations to minimize risk of the portfolio

The LOAN PORTFOLIO

• Principal – makes up the loan portfolio; part of the cooperative’s asset

• Interest – contributes to the cooperative’s income and cash flow

3 measures to describe quality of loan portfolio

• DELINQUENCY

• REPAYMENT

• LOAN LOSS PROVISIONS

LOANS: The Lifeblood of Credit Cooperatives

• Loan delinquency – one of the most common and most serious problems a coop may have.

• Weakens the operations of the cooperative.

• Slows down the delivery of services to cooperative members.

How to make Coop Members responsible borrowers

• Proper education through PMES.

• Should have a basic knowledge about the cooperative principles.

• Should have adequate information about the products and services of the cooperative.

• Should have thorough information about the duties & responsibilities of a cooperative member.

High, Rising or Uncontrolled Delinquency

“ One of the most common problem that can quickly destroy a cooperative if management does not locate the cause & remedy the problem”

Delinquency definitions

• If a members fails to pay the loan as promised or as per agreement

• Any type of loan which is not paid when due

Delinquent by installment

Delinquent by maturity

Portfolio at risk

o Mode of repayments and due dates

o Amount of installment

o Term of maturity

How to monitor & measure delinquency

• Aging of accounts

• Loan status monitor (LSM) – attached to the individual loan ledger (ILL)

Aids in Monitoring Delinquency

• Number & Amount of Delinquent loans by age

• Number of delinquent loans by purpose

• Number & amount of delinquent loans by economic activity & sex

• Number of delinquent loans by amount

Causes of DELINQUENCY

• Personal Problems

• Financial Management Difficulties

• Unexpected circumstances

• Cooperative Shortcomings

• Policies & Procedures

Causes of Loan Delinquency

• Organizational (Internal Factors)Laxity in screening/recruiting possible

members

Poor/Inefficient processing of loan applications by cooperative staff/officers

Poor monitoring, recording and reporting system

Weak collection system and procedures

• Organizational (Internal Factors)Irrelevant, Un-disseminated and unwritten

Lending policies & guidelines

Poor staff services

Poor leadership example/bad management

Officers’ poor attitude toward training

• Personal (Member factors)

– Inadequate paying capacity

–Mis-use of funds

–Misunderstanding of the coop’s objectives

• Personal (Member factors)

–The borrower cannot be contacted

–Lack of technical skills in business

–Poor savings habit

Effects of delinquency

• Demoralization among cooperative members

• Resignation of staff & Officers

• Loss or dormancy leading to bankruptcy

• Coop’s role in the community ends

• Loss of goodwill in the cooperative movement

Costs of Delinquency

• Delinquency plays a critical role in cooperative’s cost, structure, income and financial situation.

• Delinquent loans imply postponed interest income from loans with payments past due.

• Delays in income can have serious, detrimental effects on the cooperative’s cash flow and self sufficiency.

• Delinquency slows down the rotation of the loan portfolio.

• Allowing members to miss payments even though they eventually repay, allows the institution to lose vital income needed to cover the costs.

• De-capitalize the portfolio

• Decrease the cooperative assets

• Provisions for defaults have direct effects on the cooperative’s income and assets

Calculating Cost of Default Considering Variable Costs

Intial Loan Amount 75,000.00Interest (15% flat)Loan Term (weeks) 25Weekly Repayment of PrincipalWeekly Repayment of InterestTotal Weekly Repayment Payments Received 15Payments Lost 10

Lost Interest IncomeLost PrincipalTotal Lost Interest and Principal

Expected Revenue earned (75,000 loans for 25 weeks)Cost per Loan 7,500.00Net Revenue per Loan

Number of Loans Required to Earn Lost Principal Loans of 75,000( taking into account variable costs of disbursing and managing loans)

Lost Principal/Net Revenue per 75,000 loan

Number of Loans Required to Earn Lost Interest and Principal Loans of 75,000( taking into account variable costs of disbursing and managing loans)

Lost Interest and Principal/Net Revenue per Loan

Calculating Cost of Default Considering Variable Costs

Intial Loan Amount 75,000.00Interest (15% flat)Loan Term (weeks) 25Weekly Repayment of PrincipalWeekly Repayment of InterestTotal Weekly Repayment Payments Received none 0Payments Lost 25

Lost Interest IncomeLost PrincipalTotal Lost Interest and Principal

Expected Revenue earned (75,000 loans for 25 weeks)Cost per Loan 7,500.00Net Revenue per Loan

Number of Loans Required to Earn Lost Principal Loans of 75,000( taking into account variable costs of disbursing and managing loans)

Lost Principal/Net Revenue per 75,000 loan

Number of Loans Required to Earn Lost Interest and Principal Loans of 75,000

( taking into account variable costs of disbursing and managing loans)

Lost Interest and Principal/Net Revenue per Loan

Preventive & Curative Measures for Delinquency

• Prevention

–Formulation, Review and Improvement of Lending Policies and Guidelines

–Proper Implementation of upgraded Lending policies & guidelines

–Setting up/improving the loan monitoring & collection system

• Prevention

– Incentive & reward system for non-delinquent borrowers

–Training & Education for coop members

• Curative

– Off-setting member’s share & savings

– Applying the obligation of co-makers

– Accepting payments in kind

– House calls on delinquent borrowers

– Condonation of penalties

– Authorizing collection agents

– Legal action

Methods for Delinquency Control

• Coop image and Philosophy – “dole-out” mentality of the members.

• Methodology /Credit process– not clear lending and collection policies.

• Information systems / Internal Management – Information not clear; data not updated.

Coop image and Philosophy

• Members should understand that in accepting loan, they agree to a financial contract.

• Coop should create an institutional repayment culture.

• Culture should start at coop level.

Methodology / Credit Process

• Accepted loan analysis and evaluation methods.

• Design incentives for members who pay loans on time.

• Immediate follow-up after one day missed payments.

Information systems / Internal Management

• Up to date information for field workers.

• Regular review and analysis of the loan portfolio.

• Planning geographic routes to maximize collection.

• Follow-up.

• Fast loan processing.

Identifying the cause of rising delinquency

• When were the delinquent loans granted?

• Were a majority of the delinquent loans granted by the credit committee or one particular loan officer?

• Have there been any employee changes that would affect the quality of loan underwriting or collection efforts?

• Are the loan officers or credit committee adequately trained to grant quality loans?

• Do the delinquent borrowers have anything in common? Are they related? Do they live in the same area? Do they work together? Do they have similar occupations?

• Have the loan underwriting standards decreased as of late in order to increase loans outstanding?

Continuation…

• Do the loan officers or credit committee effectively analyze the borrower’s ability to repay the loan granted?

• Are the loan and collection policies & procedures adequate?

• When do collection efforts begin once a loan becomes delinquent? Is this quick enough?

Continuation…• Are collection efforts effective?

• Is the collection department adequately staffed and focused to meet the challenges of high or increasing delinquency?

• Has anyone manipulated the delinquency information in the past to hide delinquency?

• Has there been a major event that is beyond the cooperative’s control?

There is always RISK in lending money

Delinquency the most

important test of

institutional strength of a

cooperatives.

Problem Resolutions for High Delinquency

Workshop

• Using the result of the fishbone analysis, develop possible solutions for the identified causes of delinquency

Problem Resolution

• Management & Officers should ensure that delinquency is correctly calculated & disclosed

Problem Resolution

• Management should ensure that the delinquency report is useful.

• Employees working with delinquent loans should perform a review of each loan to determine their collectivity.

• All charged-off loans and loans that are in need of legal action should be given to lawyers or collection agencies.

Problem Resolution

• All charged-off loans and loans that are in need of legal action should be given to lawyers or collection agencies.

• Management should ensure that interest on loans is not accrued when loans become delinquent.

Problem Resolution

• Management should determine that the allowance for loan loss account is adequate for all potential losses.

• The use of loan extension and refinances should be strictly limited.

• If loan underwriting appears to be the source of problem, the credit policies and procedures should be revised.

Problem Resolution

• If delinquency is high or increasing due to the actions of one specific employee, that individual should be “terminated”, removed from the position or placed in another position or adequately trained.

• Loan application forms should be reviewed so as to collect necessary information.

Problem Resolution

• If loan collection practices appear to be at fault, the policies and procedures should be reviewed.

• In the cooperatives, collection activity is an afterthought and the collection work is given to an employee who has some extra time.

Loan Analysis & Evaluation

CREDIT EVALUATIONS – Key to Credit Union Success

Bigger financial risk in credit union operations lies in loans

Credit union financial strength come from profits generated by the loan portfolio

Profitability of the loan portfolio is high when delinquency is low.

The best place to stop bad loans is in credit evaluations- before they happen!

How does the cooperative determine the borrower’s

capacity to pay?

Every decision to lend money is a judgment about whether a person will repay the loan or not. That judgment is based on the analysis of the data that cooperative has about the borrower.

Tools in Determining Creditworthiness..

• Additional sources for credit information:

Credit Union files - to check the member’s various accounts, frequency of loan application, previous loan decisions, repayment records

Employer’s files - to verify the member’s length of employment,salary & loans from the company

Personal knowledge - to reinforce information obtained from other sources

Tools in Determining Creditworthiness...

amount of loan

purpose of loan

collateral offered, if any, the value and its condition

(CU employee should do a physical inspection)

total monthly obligations of applicant

number of dependents

length of residence of applicant

employment of the applicant and the employment length

monthly income of the applicant (stable and sufficient)

credit and savings history at credit union

personal and credit references

LOAN APPLICATION -when evaluating the loan application, one should consider the following:

• LOAN INTERVIEW -should be conducted for any loan that poses a risk to the credit union’s capital. It is helpful to:

Elaborate information in the application--know the borrower

Provide credit counseling about the wise use of credit-- borrowing your neighbor’s money, not donor funds.

Determine the reliability of the applicant according to their personal history and references

Establish a personal relationship-- make them understand that this is also their credit union

Sell other credit union services and educate the member about the CU’s philosophy--use this personal time wisely--IMPRESS THE BORROWER.

• LOAN WORK-UP SHEETS - This worksheet brings all the most important information together and helps the credit committee or the loan officer make a timely and effective credit decisions. Useful elements include:

• Verified income and debts

• Verified value and condition of collateral

• COLLATERAL INSPECTION FORM - This form is used by credit union personnel to document the condition of the collateral. Important information includes:

Description of the collateral offered

Identification or serial number

What is the value of equipment included with collateral

Over-all condition of the collateral

Estimated value

Any noticeable damage

Can collateral be legally possessed?

If possessed, can it be easily sold?

• OTHER DOCUMENTS NEEDED:

Written verification of income

Savings and credit history at the credit union

Collateral agreement

Proof of insurance on collateral

Appraisal (in addition to the physical inspection for specific cases)

All of the same information for the co-makers/co-signors.

CREDIT ANALYSIS

• Credit analysis is not examining facts separately but establishing a relationship between all the components that affect CRECOM’s decisions.

Purposes of Credit Analysis

Credit analysis is for evaluation of information about the member

To determine the credit worthiness, so that sound loan decisions can be made

To avoid bad loans (delinquent loans)

Components of Credit Analysis

• Loan application

• Loan interview

• Verifications

• Credit Score

• Credit Profile

• These components should:

Reveal member’s identity

Show stability, capacity to repay and credit history

Be consistent

Should be evaluated thoroughly and objectively

Tools for determining creditworthiness

∞The five C’s of credit:• CAPACITY TO PAYCAPACITY TO PAY

• CHARACTERCHARACTER

• CAPITALCAPITAL

• CONDITIONCONDITION

• COLLATERALCOLLATERAL

∞Loan Application

∞Loan Interview

How Does the Credit Union Determine the Borrower’s

Capacity to Pay?

capacity

character

collateral

capital

conditions

Using the 5C’s of CREDIT

What is Capacity Based Lending?

• Is a non-traditional lending practice in the cooperatives that gives loans based on the capacity of the members to pay.

What are the Principles of CBL?

• Security first

- members’ savings - cooperatives

Loan Quality first before quantity

• Evaluation of risk

- set the limit of manageable risk

• Grant loans to members with good standing & capacity to pay

• Thorough credit investigation

• Loan is a privilege rather than a right inherent to membership

• No loan will be extended to member with delinquent account

• Balance between risk, diversification and profitability

• Limiting loan exposures to certain geographical area

• Collateral for commercial, real estate and agricultural loans

• 70% financing for viable project

• 30% member participation

5 Cs of Credit

• Capacity – This refers to the member-borrower’s proven capability to repay the loan on the agreed terms

5 Cs of Credit

• Character

- integrity, credibility, trustworthiness of the member-borrower and or the co-borrower

5 Cs of Credit

Capital

regular, consistent amount of savings or contributions to the build-up of financial, material resources

5 Cs of Credit

Collateral

Real, personal and deposit certificates that can be offered as security to the loans

5 Cs of Credit

Condition

External factors affecting the socioeconomic condition of the loan and the borrower

Collections

Collection …..a big challenge

Between effectiveness , relationship, social involvement ,

and education

Because cooperative must

• Be efficient …

• Other time ..coops must create relationship

• Other time ….it needs social involvement

• Other time……coops must do education with the members

• The problem is that coops cannot be all of that ….at the same time so coops must choose what to do and when ….

Be efficient ….why ???

• Because the cooperative invest money in collection and wants to recuperate the money of the borrowers for the depositors

• A collector paid Php 7,000 pesos a month plus fringe benefits plus motorcycle could cost up to Php 10,000 pesos a month

• How much revenue will a cooperative need to cover the investment on a collector ?

How much per day ??

• So 10,000 pesos per month divided by a rate of interest of :

– 2% means 500,000 or more than 25,000 a day

– 1% means 1,000,000 or more than 50,000 a day

• Assuming: visiting 20 persons per day means that collectors should collect between 1,250 to 2,500 per borrower

So it is important to plan your intervention to

become efficient ….• How to plan :

– Have the list of the borrowers to visit during the week and the amount to collect

– Select with the loan monitoring officer the ones to prioritise based on amount to collect and the capacity to collect

– Organise your collection for the day based on the route , your constraints and the planning of the rest of the week ( Pay day,remittances from OWF)

– Review your day ( done ,not done ,posponed )

– Rescheduled the ones not done

How to organise and do your day ?

• While planning look at :

– Logical schedule route A to B …W

– Identify the borrowers that MUST be done ….and your constraints ( Appointments from promises )

– Respect your word : Will come back ..you come back exactly as you promised .

– Have time ( five minutes ) to review what has been done and reorganize what you have to do for the rest of the day

– Open your mind on opportunities ……to collect

– BE DISCIPLINED….

How to do collection …

• Be polite ..

• Be firm ….

• Be Strict

• Be listening ….without agreeing

• If you do not get money ….get a date and hour …and go back on due time

• Be respectful

• Leave your heart at home ….and your problems at ….the office ….

Relationship and social involvement

• Purely professional relationship otherwise you lose your credibility ….

• Friendship must be avoided when you want to collect …Ask someone else to do your friends and relatives

• You can help sometimes in exceptional circumstances but you have a job to do ….do not forget that …and cannot be involved everywhere .

Education of the borrowers …start …

• With their payment on a disciplined way

• And continue with a non delinquent account with the primary

• And the respect for the job of collection (not escape neither hide when they hear you around ) only criminals hide themself not members. Are your borrowers criminal?

COLLECTION STRATEGIES

(Effective Collection Strategies)

Why do we need to collect loans?

104070

100130160190220250280310340370

# of days past due Recovery rates

How Can Collectors Improve Collection?

• Using the Basic Tools:

Acceptable policies and procedures

Know some habits and characteristics of the borrowers

Timely management information system

The Solid Collection Program

• Written Collection Policies and Procedures-implemented and administered by the management and staff, reviewed (and updated) at least annually

• Timely Management Information System (MIS)-delinquency reports made available to Management, Collection Staff and Board at ALL times; used as basis in identifying corrective actions

The Solid Collection Program

• Use of different collection strategies and tools

• Recognition of loan losses, providing for loan losses, charge-off and continued collection activities after charge-off

Monitoring Collections(Establishing A Collection System)

“A load made well, is a loan half collected”

How & When to establish a collection system

• Recognition

• Follow-up

• Collection records

The Basics of Collection

• There must be an automatic daily system to locate delinquent accounts.

• There must be regular charge-off or a referral process for accounts the collector cannot get action on.

• Collection work is selling.

Account Classification

• In general, cooperatives should classify their delinquent accounts according to age.

• The most past due an account is, the less likely the cooperative is to receive payments.

Written Collection Work

• It consist of any written communications between the cooperative and the member regarding missed payments.

Keys to a successful lending program

• Develop a long term banking relationship with your members

• Base loan decisions on repayment capacity

• Obtain non-traditional loan security

• Use the “graduation” principle

• Develop a relationship with the client

• Closely monitor loan repayments

Tools & Technique in Effective Loan Supervision

• Conduct a site inspection.

• Project inspection/visit.

• Problem recognition.

• Officers familiarity with the borrowers.

• Be proactive in dealing with the borrowers.

• Proper documentation

Ways of Collecting Accounts

• Offer the borrower a clear choice of action

• Get a reasonably short repayment program

• Look for vulnerable areas of target for collection effort

• Give the borrower a good reason to weigh things clearly

Ways of Collecting Accounts

• Plan and exert psychological collection efforts.

• When drastic or legal action is finally decided upon to enforce collection, proceed fast because borrowers generally does things damaging or unfavorable to the lender’s interest.

Considerations in Loan Restructuring

• Require a reasonable amount of payment to be assured of the borrower’s sincerity and commitment.

• Validate sources of payments.

• Obtain written plan for the borrower.

• Make the borrower understand that lack of amicable settlement will mean legal action by the cooperative.

• Condonation of penalties as “incentive”.

CONCLUSIONS

• It is a fact that loan delinquency is a major problem to many lending institutions in the Philippines including cooperatives. The causes of loan delinquency maybe due to un-systematized and passive collection of loan repayments and members’ misunderstanding on their role as cooperative members.

CONCLUSIONS

• To deal with delinquency, the cooperative should have a clear collection and lending policies as part of financial management. These policies should be properly implemented and reviewed. This is the best way to prevent delinquency to happen. However, the strictness of such policies should not hamper the good relationship that exist between the officers/staff and the members.

“Credit is like a flame; use,

value, nurture, and manage it

well.”

Collection Process

Collection Procedures

• Collection Starts on the First day of after a non-payment of amortization.

• Reminder letter should be sent within 15 days of delinquency.

• A Demand letter shall be sent if no action is made with reminder letter.

A-1 Client Call/Visit• Speak pleasantly and clearly

• Proper grooming

• Greetings

• Update of loan account/borrower

• Get reasons for non-payment

A-1 Client Call/Visit

• Know how he can make payment

• Date & place of payment

• RECAP

• DON’T FORGET TO FOLLOW-UP

A-2 COLLECTION STRATEGY AND TACTICS

STRATEGY – a plan of action developed to achieve a goal or objective.TACTIC – the behavioral maneuvering one undertakes to carry out the strategy.

A-3 Application of Payment

1. Miscellaneous Advances (insurance, mortgage, legal)2. Penalty3. Interest4. Principal

A-4 Debt Recovery Courses of Action (non-legal)

• Extension/rollover of loan

• Restructuring

• Charge-off

• Collect from co-maker

• Sale of mortgage property

• Sale of other properties

• Sale of business

A-5 Remedies Used in Litigation

• Foreclosure – process by w/c a mortgage acquires an absolute title to the property upon which he had previously a lien or encumbrance.

• Dacion en pago – a juridical concept whereby a debtor pays off his obligation to the creditor by the conveyance of the ownership of his property as an accepted equivalent of performance payment (payment in kind).

A-5 Remedies Used in Litigation• Replevin – a provisional remedy

which may be availed of whenever the complaint in an action prays for the recovery of the possession of personal property (bond).

A-5 Remedies Used in Litigation• Attachment – a provisional remedy by

which property of the defendant is taken into custody of the law as a security for the satisfaction of any judgement w/c the plaintiff may recover.

• Garnishment – a warning to a person in whose hands the effects of another are attached, not to pay the money or deliver the property of the defendant in his hands to him, but to appear & answer the plaintiff’s suit.

• Writ of execution – a judicial order to enforce payment, satisfaction or performance of a final judgment against the defeated party in a case. Valid only for 60 days.

credit management for cooperatives

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capital share

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