What is the Lending Club debt collection process?

By on February 10th, 2015 in Industry Insights

As of Q3-14, more than $6 Billion have been borrowed on Lending Club. The p2p lending platform allows individual investors to lend to consumers for various needs – most often, credit consolidation – and get a hefty interest in return. Most of the loans on Lending Club are paid back, but some of them don’t. We estimate that default rate at 5-7% overall, and naturally much higher when the loans are riskier. Borrowers pay their loans back via a monthly ACH payment, split and applied to all the notes that make up their loans, with the different lenders whose money they got. What happens when the note defaults? How do you see what happened? What is the Lending club debt collection process? Let’s take a look at the Lending Club interface and find out.

Once you sign in to Lending Club’s interface, you’ll see your portfolio overview.The overview shows you how your portfolio performs – but we want to go deeper.Look for the “My Notes as-a-Glance” link below the Interest Received box. notes-glance
Once you do, you’ll see all the notes that your portfolio is composed of. Notes are broken down by their status and age – and you can follow the lifecycle of a note through its maturity. Obviously, you’ll see a number of notes that are charged off.Let’s click those, so we can see how collection efforts play out to completion – and that happens when they fail and the note is charged off (and usually sold).Click the number next to the Charged Off line. charged-off
Once you click through, you’ll see a list of your Charged Off notes. You can review their type and amount, and maybe use the information to change your investment strategy. charged-off2
Click the “Charged Off” link to the right.
This is the Loan Performance page. You can follow past and future payments, as well as other details about the loan. Once you scroll down on this page, you’ll see the history of collection efforts made by Lending Club on this note.
This is the Lending Club debt collection log. There are a few things to note:

  • Lending Club makes phone calls at varying times through the life cycle of the note’s delinquency.
  • We don’t know how Lending Club decides when to schedule a call or whether there are other means of communication that are used through the process – in all of our reviews, we only noticed phone calls with or without leaving a message.
  • The calls seem to happen every several days to several weeks, sometimes 2-3 calls a week. We assume it’s because the debtor didn’t respond.

Are you following the collection process your notes are going through?

Are you making sure your notes are being worked? If you have questions or are looking for more advice on making sure you get paid, check out our resources page.