By Eric Thaller
As part of our ongoing efforts to improve the investor experience on the Prosper platform, we are making changes to the way we deal with charged-off loans. On July 17th, Prosper introduced a debt sale recovery strategy aimed at delivering an increased level of return for investors in a more timely manner. Under the new debt sale program, which is common practice in our industry, charged-off loans during the month will be packaged together for a debt sale the following month.
This new debt sale strategy offers significant benefits to our investors. First, charged-off loans will be lumped together and sold to a single debt buyer on a monthly basis, delivering a return to investors on a significantly reduced timeline. Second, the current market for debt sales is at historically high levels – we have negotiated a debt sale rate that will deliver a meaningfully higher net recovery amount than is currently being realized by the collections agency.
Previously, charged-off loans were placed at a recovery agency that conducted third party collection efforts on behalf of Prosper. Post charge-off recovery efforts are highly reliant on lump sum settlements (settlement for a lesser balance), long-term repayment arrangements (reduced low monthly payments) and other long-term settlement strategies, which can extend beyond a 12-18 month period.
Notes corresponding to loans that have been sold will have “sold” listed next to them in investors’ accounts. Investors will be able to see proceeds related to a debt sale on their monthly statement, as well as in the “account transactions” section, which is located in the history section of the online account.
We are committed to making ongoing changes that improve the experience for our customers. If you are a Prosper investor, and have any questions about this change, you can contact us at firstname.lastname@example.org or by phone at 877-611-8797.