diff --git a/fineract-loan/src/main/java/org/apache/fineract/portfolio/loanaccount/domain/Loan.java b/fineract-loan/src/main/java/org/apache/fineract/portfolio/loanaccount/domain/Loan.java
index 27bb50d75a..0d47a4f6c0 100644
--- a/fineract-loan/src/main/java/org/apache/fineract/portfolio/loanaccount/domain/Loan.java
+++ b/fineract-loan/src/main/java/org/apache/fineract/portfolio/loanaccount/domain/Loan.java
@@ -3572,4 +3572,10 @@ public LoanRepaymentScheduleTransactionProcessor getTransactionProcessor() {
     public boolean isProgressiveSchedule() {
         return getLoanProductRelatedDetail().getLoanScheduleType() == PROGRESSIVE;
     }
+
+    public boolean isTransactionBeforeZeroInterestChargeOff(final LoanTransaction transaction) {
+        return !this.isChargedOff()
+                || !LoanChargeOffBehaviour.ZERO_INTEREST.equals(this.getLoanProductRelatedDetail().getChargeOffBehaviour())
+                || !transaction.getTransactionDate().isAfter(this.getChargedOffOnDate());
+    }
 }
diff --git a/fineract-progressive-loan/src/main/java/org/apache/fineract/portfolio/loanaccount/domain/transactionprocessor/impl/AdvancedPaymentScheduleTransactionProcessor.java b/fineract-progressive-loan/src/main/java/org/apache/fineract/portfolio/loanaccount/domain/transactionprocessor/impl/AdvancedPaymentScheduleTransactionProcessor.java
index d08bb6288f..016c75d759 100644
--- a/fineract-progressive-loan/src/main/java/org/apache/fineract/portfolio/loanaccount/domain/transactionprocessor/impl/AdvancedPaymentScheduleTransactionProcessor.java
+++ b/fineract-progressive-loan/src/main/java/org/apache/fineract/portfolio/loanaccount/domain/transactionprocessor/impl/AdvancedPaymentScheduleTransactionProcessor.java
@@ -1583,7 +1583,8 @@ private Money processAllocationsHorizontally(LoanTransaction loanTransaction, Tr
                                     transactionMappings, loanTransaction, oldestPastDueInstallment, currency);
                             Loan loan = loanTransaction.getLoan();
                             if (transactionCtx instanceof ProgressiveTransactionCtx ctx && loan.isInterestBearing()
-                                    && loan.getLoanProductRelatedDetail().isInterestRecalculationEnabled()) {
+                                    && loan.getLoanProductRelatedDetail().isInterestRecalculationEnabled()
+                                    && loanTransaction.getLoan().isTransactionBeforeZeroInterestChargeOff(loanTransaction)) {
                                 paidPortion = handlingPaymentAllocationForInterestBearingProgressiveLoan(loanTransaction,
                                         transactionAmountUnprocessed, balances, paymentAllocationType, oldestPastDueInstallment, ctx,
                                         loanTransactionToRepaymentScheduleMapping, oldestPastDueInstallmentCharges);
@@ -1605,7 +1606,8 @@ private Money processAllocationsHorizontally(LoanTransaction loanTransaction, Tr
                                     transactionMappings, loanTransaction, dueInstallment, currency);
                             Loan loan = loanTransaction.getLoan();
                             if (transactionCtx instanceof ProgressiveTransactionCtx ctx && loan.isInterestBearing()
-                                    && loan.getLoanProductRelatedDetail().isInterestRecalculationEnabled()) {
+                                    && loan.getLoanProductRelatedDetail().isInterestRecalculationEnabled()
+                                    && loanTransaction.getLoan().isTransactionBeforeZeroInterestChargeOff(loanTransaction)) {
                                 paidPortion = handlingPaymentAllocationForInterestBearingProgressiveLoan(loanTransaction,
                                         transactionAmountUnprocessed, balances, paymentAllocationType, dueInstallment, ctx,
                                         loanTransactionToRepaymentScheduleMapping, dueInstallmentCharges);
@@ -1636,7 +1638,8 @@ private Money processAllocationsHorizontally(LoanTransaction loanTransaction, Tr
 
                                 Loan loan = loanTransaction.getLoan();
                                 if (transactionCtx instanceof ProgressiveTransactionCtx ctx && loan.isInterestBearing()
-                                        && loan.getLoanProductRelatedDetail().isInterestRecalculationEnabled()) {
+                                        && loan.getLoanProductRelatedDetail().isInterestRecalculationEnabled()
+                                        && loanTransaction.getLoan().isTransactionBeforeZeroInterestChargeOff(loanTransaction)) {
                                     paidPortion = handlingPaymentAllocationForInterestBearingProgressiveLoan(loanTransaction, evenPortion,
                                             balances, paymentAllocationType, inAdvanceInstallment, ctx,
                                             loanTransactionToRepaymentScheduleMapping, inAdvanceInstallmentCharges);