Collection Agencies
Lending Club takes every precaution to screen out borrowers who are likely to pay late. However, sometimes unfortunate events do happen and loans become delinquent for a variety of reasons. Lending Club has contracted with the collection agency below to act on lenders' behalf, relying on their expertise and years of experience in recovering funds from delinquent borrowers. Since federal regulations and local laws prohibit certain types of collection activities, we ask that lenders do not attempt to collect themselves even if they have personal relationships with the borrowers.
How the Collection Process Works
When a loan is past due and the payment has not been received, Lending Club immediately contacts the borrower regarding the past due situation and requests the borrower to make an immediate payment. This often happens when a borrower changes banks or forgets to sufficiently fund their bank account. After the 15-day Grace Period, a Late Payment Fee will be assessed on the loan to compensate the lenders for the delay in payment. Lending Club will proactively contact the borrowers to fix the situation as soon as possible during the first 30 days after the due date.
Starting on the 31st day, a delinquent loan will be sent to a collection agency for collection. The agency will be responsible to recover the late payment(s) and try to bring the loan back to a current status. The collection agency will only charge the lenders for their fee if they are able to collect a payment. Please see below for their rates.
If a payment can not be collected for 3 months after the loan was sent to the collection agencies (that is, 120 days past due), the loan will be removed from the lenders' portfolios as a total loss (a charge-off). Lending Club will continue to collect on the charged-off loans until the loans are finally packaged and sold to a debt purchaser, which may take another six to nine months. Any recovery of the loan will be credited to the lenders' accounts as extraordinary income.
Collection Agencies
Credit Bureau Hudson Valley, Inc. (CBHV)
http://www.cbhv.com/
Established in 1974, CBHV has been a premier collections agency providing great recovery performances for over 32 years. The agency has clients in many industries including banking, credit unions, utilities, healthcare, and insurance.
Collection Fees
CBHV will charge a collection fee that is a percentage of the amount recovered during the period as shown in the following chart:
- 30–60 days past due
- 15%
- 61–90 days past due
- 10%
- 91–120 days past due
- 7%
- After charge-off
- 25%
- Litigation
- 30%
