What is Bankruptcy?
Bankruptcy is a legal process by which a person or organization declares inability to pay outstanding debts.
How do we handle this process in the Collections application?
A bankruptcy request is initiated on behalf of the customer. So the customer would let a collector know that they have started this legal process. And then the collector would go in to the application and initiate this process to make sure that collection activities are suspended.
How do I initiate a bankruptcy request?
The bankruptcy request are basically sent to an appropriate person for approval. There is a workflow process that will route that approval to a collections manager so that they can look at the request and approve or reject.
After a bankruptcy request has been submitted and potentially approved, that bankruptcy request can be withdrawn. A notification is sent to the collections manager to approve that withdrawal request. Once that bankruptcy withdrawal request is approved, the customer status switches from bankrupt to delinquent.
What configurations are necessary to use these bankruptcy requests functionality?
Enable Bankruptcy
There is an important setting in Global Preferences that needs to be turned on for your organization to use these functionalities. The setting is "Enable Bankruptcy". If this option is set to Yes, the Bankruptcy subtab appears under their Profile tab in the Collections work area.
Go to the Functional Setup Manager, under the Financials Offering, Collections Functional Area, go to the task "Manage Collections Preferences". At the top we have Global Preferences. Locate the Enable Bankruptcy option right at the bottom of the Global Preferences and set it to Yes.
Note that this is not a setting that can be enabled for one business unit only or for a group of business units. It's something that's going to be available for all business units.
Bankruptcy Reasons
Bankruptcy Reasons allow you to report and track different types of bankruptcy requests. These are very useful for reporting and tracking purposes.
To add more Bankruptcy Reasons, Go to the Functional Setup Manager, under the Financials Offering, Collections Functional Area, go to the task "Manage Collection Lookups". Look for the Lookup type of "Bankruptcy_Disposition_Reason". These are all associated with a common set ID. There are already seeded reasons (Entered in Error, File for Bankruptcy, and Reorganized) but you have the option to add more to the list.
How do we process a bankruptcy request?
To actually initiate the bankruptcy request, navigate to the Collections work area and you select the customer in question and simply click on the "Request" button under the bankruptcy sub-tab. The approval workflow kicks in and routes a notification to the appropriate person, that Collections manager or supervisor that's supposed to review their request and approve or reject.
What is the impact of Bankruptcy?
All accounts and sites under that customer and all transactions will be suspended. Collection activities are also suspended and delinquent transactions no longer appear in the Collections work area. In addition, the customer will show a status of bankrupt.
A collector can still find the customer and view the transactions associated with the customer. But they won't be able to perform any Collections activities, such as receiving a payment, or even putting in a payment promise, or dispute a transaction because, again, the customer has filed for bankruptcy. They'll be unable to make payments.
What Type of Information do I need to store for Bankrupt Customers?
There may not be a field in the Collections application to capture information specific to your organization such as claims, attorneys involved, filing locations. This can be handled by Descriptive Flexfields. Descriptive Flexfields are fields that you can use to store information unique to your organization, your industry, or for special circumstances or scenarios like this one.
Below is a step-by-step video on how to Manage Customer Bankruptcy in Oracle Fusion Applications:
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