The Peer-to-Peer Finance Association (P2PFA) guidelines consider that a loan defaults after any portion of the loan is not repaid after 120 days following the original loan repayment date.
We have a more conservative approach and consider a loan defaulted when a borrower has missed a scheduled payment by more than 60 days (or, in other words, the loan is 60+ days overdue). We do this in order to indicate that we have started legal action against the borrower, not that the loan has been written off.
When a payment is late or the borrower is having trouble making the payments, Bondora will inform the borrower immediately, i.e. a notice will be sent to the borrower on the next day after the payment date. Additionally, s/he will be reminded about the debt on a weekly basis.
If the problem persists and no agreement can be made after the loan is 60 days overdue (such as a temporary grace period), we will initiate a legal action.
After the loan is 61 days overdue, it will be passed on to the Estonian arbitration or the European Payment Order (for all the other markets). After the legal decision is taken, the case will be handled by a bailiff.
The debt collection process is initiated automatically, meaning there is nothing our investors need to do to claim or handle the debts. We will collect the loan until the maximum amount possible is paid back. All collections costs, approximately 150 euro per defaulting loan, are covered by Bondora.
It may take time to collect the defaulted loans, but investors don’t have to spend time or funds to recover it themselves. Therefore, as mentioned earlier, the “defaulted loan” status does not mean that the loan is written off, but that we have started legal actions to collect the loan.
A late charge, i.e. 0.2% interest for each overdue day, is added to the total overdue amount for the investors (except, for the Finnish loans where it is forbidden by law).