Co-Operative Societies Act 2008
27. Bad and doubtful loans
1. When the whole or part of a loan made by a credit union remains unpaid for a period of 12 months after the date fixed for repayment in full of monies loaned and no payment on account of principal has been made after the date, the amount of the principal remaining unpaid, shall be charged to and paid from the reserve for doubtful accounts fund less than any money standing to the credit of the borrower on the books of the credit union in a share or deposit account and less the market value of any security held by the credit union in respect of the loan. The society may, with the Registrarís approval, reduce the period of 12 months.
2. Any monies subsequently recovered with respect to such loans shall be taken into income.
3. All interest which has been collected thereon during the current year shall be deducted from the outstanding loan interest, if not already done so, before the write off is made.
4. With the approval of the Board, any collection fees or commissions, or legal charges incurred in the collection of the loan may be added to the loan before the write off is made.