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Collections Update

by Doug Fuller on 08/25/08

Let’s start with some housekeeping issues. First of all, the refunds of AmSher collection fees should be processed in the next few days. We have calculated the refund amounts on all payments through the end of July. Once the program is written and tested is should be an easy matter to run it for each month’s affected payments.

Secondly, many of you will have noticed that some of the issues with the “Collections Statistics” page have been corrected (most noticeably the fact that the last 3 months and lifetime were displaying the same numbers). There is still a problem with how the agency interface updates the statistics table. The good news is that the logic that handles the actual placement and recall is functioning correctly, the problem is strictly in how the status is being updated on the web site. We are currently doing an “account by account” reconciliation and should have all statistics corrected by month end. In conjunction with this effort we are working on a major rewrite of the agency interface. Once completed, this new interface will not only provide additional visibility such “collections exceptions” as having received notice to “cease and desist” or of attorney representation, but should also allow daily files to be sent back and forth with the agencies—currently updates are done on a twice a week basis.

On the legal test, we have filed for “Default Judgment” on the first 20 cases. An additional batch of defaults will be going out next week. The law firm is continuing to work on obtaining “service of process” on the remaining cases. In terms of fallout, we have had 7 accounts file for bankruptcy, two of the accounts have moved out of state, one is deceased and two suits have been contested.

Finally in looking at AmSher’s performance, I remain very pleased with their efforts. One of the key metrics that I look at is what portion of accounts placed with them do they obtain a “right party connect” (meaning that they actually spoke to the debtor) within the first six weeks of placement. AmSher is successfully contacting more than 40% of the debtors. This is extremely good. July was the first month in which dollars collected per account decreased. During my July trip, I reviewed the results across all of AmSher’s portfolios, the decline is happening across the board. This is clearly the sign of a deteriorating economy.

When AmSher gets a debtor on the phone, they first attempt to secure payment for the total delinquent amount due. If the debtor cannot make that large of a payment, they then attempt to secure a payment equal to the monthly amount—to prevent the account from aging another month. During my July visit, I instructed AmSher to fall back to attempting to secure a payment equal to half of the monthly amount—this will at least retard the rate of roll.

On my next trip, we will evaluate the effectiveness of this approach.


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7 Responses


Eliot | August 26th, 2008 at 4:53 pm

What is the best possible outcome on the 20 default judgements prosper has garnered. a house lien? garnished wages? if you do get some kind of payment will it be in the form of a check in the mail or a credit to our prosper account. please clarify


mothandrust | August 26th, 2008 at 5:45 pm

Thanks for the update. I believe I was the first to report the collections overcharges in late February to Prosper, and it is now almost 6 months late. Do you think it would be appropriate for Prosper to pay lenders interest on the outstanding balances?


Doug Fuller | August 26th, 2008 at 7:01 pm

In the realm of legal collections, the first step is to obtain the judgment. Liens and garnishments are “post judgment remedies”. In the case of a lien, the judgment is abstracted and recorded in the local deed office. In the case of a garnishment, you have to go back to court and get a separate order signed.

As funds are collected, disbursements will be made via posting to Prosper accounts.


Matt | August 28th, 2008 at 2:44 pm

are there any plans to obtain judgments on debtors from other states or do those borrowers get a free ride?


zarp2000 | August 31st, 2008 at 10:03 am

any update on the post-chargeoff collections effort?

Will lenders ever get the opportunity to claim the losses on this years taxes?

thank you


NewHorizon | September 2nd, 2008 at 12:43 pm

For the convenience of readers here, I think the most recent update about the post-chargeoff collections effort is here:
http://blog.prosper.com/2008/05/30/debt-sale-update-2/

I share zarp’s desire for any updates since then.

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