Payroll date last day of month, deposit next month, default date?

[TPApril]

Say payroll date is 12/31.  Paychecks are not typically issued until the following week, ie in the following month.

Loan payments were stopped.  Would the loan default day (at end of 2nd quarter following first missed payment) be 6/30 or 9/30?

[Bill Presson]

Typically the compensation is considered earned in the year in which it's paid unless the sponsor is doing true compensation accrual and that almost never happens. So the loan payment was missed in January. The maximum cure period is the last day of the quarter following the quarter in which the payment was missed. So it would be 6/30.

I can't imagine how it would ever be 9/30.

[TPApril]

Thanks Bill!

Yes of course, 3/31 & 6/30, not sure what I was thinking but I actually do know that ;).

[Bird]

I'd say it would depend on the way the loan payments were set up.  If (apparently correctly) they were set up as being due early each month, then I agree with the above.  If they were set up with due dates at the end of each month, then the failure on the 12/31 payment would trigger a default on 3/31.

[TPApril]

They are set up as part of payroll which happens on the 15th, 30th of the month, although pay/deposit is actually made the following week. So the amortization schedule shows a payment due 12/31 that would have been deposited 1/5. It was missed and no further payments made so just trying to clarify if default date is 3/31 (based on 12/31 in amortization schedule) or 6/30 (based on when deposits were routinely made).

[Bill Presson]

Well, that may complicate things. I believe it was an error to not match the amortization to the pay date as that's when the money is actually available. I think Bird is right here.

[Bird]

Is there any way this does not default in 2021?  If not, I don't think I'd worry too much.

[TPApril]

47 minutes ago, Bird said:

Is there any way this does not default in 2021?  If not, I don't think I'd worry too much.

true, but the dates were changed from the actual case to be a more generic question, in this case it does matter actually.  I just found it interesting to contemplate the event happening around 12/31.