Noticed a few new entries in the collection log today.
9/4/14 (Thursday) Account was sold to a third party debt buyer
https://www.lendingclub.com/account/loanPerf.action?loan_id=2836994&order_id=22763885¬e_id=173669469/25/14 (Thursday) Borrower contacted Lending Club and agreed to pay a settled amount
https://www.lendingclub.com/account/loanPerf.action?loan_id=1278838&order_id=37621774¬e_id=10521847Anyone have any idea what kind of discount a "third party debt buyer" would be paying or what the discount would be for a "settled amount"? Neither note has made a recent payment.
Caveat, I do not work in this area but have some passing familiarity with it from my day job. Please note, my comments are mere guesswork.
My guess is the third party debt buyer is going to pay 5-15% for a large pool of bad loans. The third party will tend to buy bad loans from a particular geographic area and will probably be closely connected to (if not) a law practice in that area. The third party will then bring to bear the full range of legal avenues available to a creditor to make these "bad" loans profitable while taking advantage of economies of scale. The third party will start with a FDCPA compliant collection letter, and go from there if necessary to lawsuits where they, more often than not, will get default judgments, tack on attorney fees and costs, and then move to wage garnishments. They'll agree to compromise many of these debts with the borrowers throughout this process for a 25-50% payment. Other debtors will enter into new agreements to pay over time. These are generally high-volume operations and can be very profitable. While the charged off loan has no value to us on this platform, to a third party debt buyer the loan has value until the day the statute of limitations runs on the defaulting loan.
I would expect direct settlements with the borrower heading towards charge-off on the LC platform to range from anything in the ten cents to thirty three cents on the dollar range.
My guesswork can stand to be corrected.
Saw a new collection entry (for me) on a loan that is in Chapter 13. The loan was charged off on 5/30/14. I received a recovery on 9/26 ($3.30 out of an outstanding principal balance of $23.30).
https://www.lendingclub.com/account/loanPerf.action?loan_id=5754946&order_id=8241420¬e_id=24892750 has an entry on 12/12/14 for the Chapter 13 filing and another entry on 12/12/14 of "Lending Club filed Non Dischargeability Complaint (Chapter 13 Bankruptcy)".
So, are dates for this Chapter 13 loan erroneous (since a recovery has already be made) or is LendingClub becoming more aggressive with scofflaws who are trying to game bankruptcy laws?
http://www.nolo.com/legal-encyclopedia/nondischargeability-complaints-bankruptcy.html