Overview

Delinquency is a key concept to understand in Canopy that is relevant to program operators in a variety of contexts.

In this page, we'll cover the difference between delinquency and past due within Canopy's system, managing delinquency, and reporting.

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Delinquency vs Past Due

Delinquency in Canopy refers to the operationally defined status of an account. Past due in Canopy refers to the state of an account any time a payment due date is missed.

Delinquency

Delinquent accounts strictly refer to when an account has had a sub-status of DELINQUENT applied to it.

What Determines Account Delinquency?
Accounts delinquency status can be changed in two ways:

1. Manually set from CanopyOS or via an account status update API call.

2. Automatically applied based on your operational rules and policies.

   This automatic application of the status is determined based on the values you configure for delinquent_on_n_consecutive_late_fees and late_fee_grace.

Past Due

As previously mentioned, past due refers to the state of an account any time a payment is missed.

Accounts in a past due state strictly refer to whether or not a borrower has any accrued balance that has not been paid in full once the payment due date has passed. The days past due is the number of days since the earliest due date in which a payment was missed.

What Determines Account Past Due State?
Past due is a calculation of days since the oldest statement in which the minimum due balance was not paid in full.

Notable Differences

While the two terms refer to related concepts, it is important to note that the two are independent and follow different criteria and, therefore will not always match. Past due state does not take into consideration account sub-statuses of delinquent, late fee grace periods, or any other operationally defined policies that you may have in place.

For example, if a borrower is 2 days late on their payment, but you have a 5-day late_fee_grace policy, then the account would be in a past due state, but not yet have a status of delinquent applied to it. If the borrower still has not paid after 5 days past their due date, then their account would have a delinquency status applied to it and would still appear in a past due state.

Similarly, this behavior can occur if manual changes have been made to change the status of an account through an API call or in CanopyOS.

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Data Access & Reporting

Past due and delinquency data can be accessed in Canopy in the following ways:

Delinquency Status

1. Through the [GET /account](ref:getaccount) API call.
2. The account_status_subtype field on the Account table in DataDirect
3. As a tag on an individual account view in CanopyOS.

Past Due State

1. In the deliquency_report in DataDirect.
2. Although not directly accessible to view or interact with, it is important to note that if you opt into using our Credit Reporting integration, it will be using this past-due state for reporting purposes.

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Deprecation Alert

In an effort to reduce the possible confusion cased by the conflation of these terms, we will soon be deprecating the delinquency_report name in favor of more aptly naming it the past_due_report.

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Managing Delinquency States with Policy

Understanding and managing delinquency is pivotal to your organization's ability to maintain healthy accounts. This includes establishing norms and controls, defining policies, and engaging with borrowers effectively.

Each organization can have unique operational processes around delinquency. These processes aim to prevent, manage, and resolve delinquency states while ensuring the borrowers' best interest.

Entrance & Exit Criteria

Delinquency

You can define policies stipulating entrance and exit criteria for delinquency.

As mentioned above, the following configurations allow you to control delinquency status entrance criteria: delinquent_on_n_consecutive_late_fees and late_fee_grace.

• You can define the late_fee_grace value using the late_fee_grace field within fee_policies when creating a product

Example:
If you had the following configuration settings:

delinquent_on_n_consecutive_late_fees = 1
late_fee_grace = 3 days

These settings tell the system that after the first time a borrower misses a payment, wait 3 days, and if the payment has still not been paid in full, apply an account status of DELINQUENT.

An account will automatically be returned to an ACTIVE status when the entire minimum amount due has been paid in full.

Past Due State

As previously mentioned, an account being in a past due state is purely driven by a payment being missed and therefore is in part determined by the min_pay_type configured.

Read more about minimum payment configuration here.

The exit criteria for the deliquency_report in DataDirect is that a payment in the amount of the cure amount is met; that is, the amount needed to be paid by the current cycle payment due date.

Policy Application

Notifying Borrowers

Policies also govern the communication strategies with your borrowers. As you understand your policies, you can send timely and accurate notifications to borrowers about their delinquency states, enabling them to take necessary action.

In order to communicate delinquency and past due status to your borrowers, Canopy provides notifications upon an account moving into a delinquent status as well as a configurable notification upon missed payment. These are provided through our account_update, minimum_payment_missed and account_delinquency webhooks respectively. Read more about turning on webhook notifications and the data provided with each here.

Preventative Communications

Canopy also provides a configurable minimum_payment_due webhook notification, which can alert you when an account's due date is approaching.

This can be utilized to proactively communicate with borrowers and increase repayment rates.