I never said everybody is here to lose money.

People have clearly posted that they are learning and are using money that are comfortable losing if that is how it works out. You might not be happy that they are operating in such a way. Presently there is no way to screen out the lenders who are in training mode from the loans you are funding.

We do not know how many lenders are prudent, successful or otherwise competent in their lending decisions. We do not have enough data. If and when we do we can start rating loans by how bid on them (either using strong lenders as a positive indicator or by using the presence of poor lenders as an negative indicator.

Have you considered a probation period to train and vet lenders so that we have fewer poor decisions? Or maybe a way to bid on loans with Prosper dollars that shadow real cash so people can learn without influencing real auctions.

Some have criteria in standing orders that target loans that are largely funded. We know we have on large lender who throws money at listing and therefore raised the funding level but maybe does not vet the same way as others.

There are anecdotal comments in the forum from some lenders that they are prepared to lose all. Others comment on how they are refining their strategy to fund fewer AF loans, etc. There is a discussion about a possible flight to quality in the near future (maybe already started). All are indicators that the present mix of loans might have risk levels in excess of what people first expected or would want.

The success of the collections does depend on both the competence of the firm handling the collection and the paper they are dealing with. The age, the quality and the accuracy of the background info that is provided as part of the loan file all matter. Even if all the background info is correct it could come down to the lenders just made a bad decision.

If there are collection firms that strongly believe they can do a lot better then can bid for the business. They should be able to undercut the competition if they have a much higher success rate. Until they handle some of the loans and we see if they really are more than just talk it would be hard to really know. We would be experimenting and that comes at a price.

The in-house solution is not really an option. You need volume to run an in-house collection operation. Prosper is not even close to having the volume across the US to support the overhead associated with building such an operation. Maybe later after there is more profit and more defaults.

nor mine

...Gulp

No. I've been thinking about a probation period to train and vet group leaders.

You keep repeating this, but it seems totally irrelevant to the current discussion. Should we take from this that it is unimportant to operate collections well? No, surely not.

I agree completely. I tried to deal with that in a quantitative fashion in our earlier exchange, but you seem to want to avoid any quantitative discussion.

Quite the contrary, an in-house collections department may be the ONLY thing that can work for Prosper.

Looking across many decisions prosper has made, you can see that they chose options to minimize cost. Perhaps good decisions once things are up and running, but not an excellent way to get started. They immediately outsourced customer service, for example, to some people in another country who have no idea how prosper works and can't fix simple problems to save themselves. They outsourced collections to some folks for whom prosper's collections are a tiny part of their total business. Doing both in house would have been more expensive initially but would have been much higher quality.

I have had some experience with customer service. Getting it set up correctly is nontrivial. You have to educate the low level telephone operators and give them lots of written instructions. Unfortunately, when you're starting a new business you don't know what needs to be in those instructions. You have to learn this before you write the instructions. You do this by handling customer service calls youself. There's really no other way. I've made the point to prosper folks that modern telephone equipment allows people in diverse locations to participate in the customer service rotary. It would be trivial for the principals in San Francisco to each spend a half-day a week answering customer service calls. Not long after they started that they would have a deep understanding of the kind of calls that come in, and the information that the customer service people need to answer those calls. (Hint: "Someone will call you back" is not an answer.) Sure this would cost more than letting the outsourced people handle it all, but it would work better. First you have to execute, then you can execute cheaply.

I suspect collections works the same way. Here's a hint: Prosper already does have an internal collections department. They handle loans from the time they first go late until 30 days late. Have you looked at <15day or even "late" (ie between 15 and 30 day) loans? They almost all flip back to current. How is it that loans almost all flip back to current from these late states, but then once they go 30 days boom they allmost all head for default? Do you think there is something magic about 30 days?

The level of activity in collections is a choice.

There will be more defaults.

Looks like NCI got their first loan. It's really small but we'll have to see how it goes.

Unco.

Woo hoo! Christmas and Thanksgiving all in one. New collection agency stats out today. The following image was archived on 10/18/06.
(IMG:http://img.villagephotos.com/p/2006-6/1187065/prospercollections20--2006-10-18.JPG)
As Unco noted, NCI has finally engaged on 1 loan. Can't do statistics on that yet, so back to Penncro.

Penncro has now worked on 159 loans, of which 9 have been cured.
9 / 159 = 5.66%

The numbers aren't changing much these days. In other words: Nothing is happening. Status quo. :(
I have a hard time seeing how Prosper can survive with numbers like this.

thank goodness. I followed you advice pninen and changed my default group to nci

I disgaree. Prosper could just hire 1 in-house collector for the 160 loans that have defaulted and easily spend 1 hour a month (160/20 days) on each loan which I guarantee you is more than the collection agency is spending.

But Propser isn't going to profit from that work.

In house collecting might help lenders, but not Prosper's bottom line.

Prosper has to keep moving loans along in order to make a profit. Getting caught up in dealing with troubled loans isn't good for their business model.

I have some very bad news. The collection agencies appear to be doing what they are supposed to be doing (well, at least Penncro is).

I have exchanged a couple PMs with a borrower who is two months late, and who agreed to answer questions about the collection efforts from a borrower perspective. Here's what I learned:

The borrower's account appears to be assigned to a particular collector (i.e. all contacts are from the same person). The collector seems very professional, and was calling every day including Sunday until the borrower explained that this frequency violated the state version of FDCPA; the calls have continued at a reduced frequency since then. The collector begins with a standard collection spiel (including, I assume, all the usual legal disclaimers), asks for information about the borrower's finances, and emphasizes that "people are counting on you to repay the money they loaned".

The borrower indicated that Penncro's phone system seems to have problems which result in calls being disconnected, and that this happened four or five times. My impression is that this was a fraction of the calls which have been made, so there has been no shortage of phone contact.

The borrower did not mention written correspondence; under FDCPA, at least one letter is required once collection begins.

In view of Prosper policies, etc., I opted to not ask follow-up questions, so portions of this account are necessarily vague.

If every other borrower account is being handled in the same manner, it appears to me that Penncro is making a diligent effort, and handling the collections in a manner consistent with its presumed role as an outsourced internal collections department. Since they are not achieving results, this suggests to me that the main problem is with the loans themselves (or at least the subset of loans that go delinquent within the first few months after funding), not the collectors.

Riddle me this batman:

If a loan goes 30 days late, why would a phone call from a collector automatically bring it current? If a man got no $, a man got no $. With the automatic ACH transfers, it's not like the guy "forgot" to mail a check.

The primary function of a collection agency, so far as I can tell, is to be annoying, on the theory that a debtor will choose to reduce the annoyance level by rearranging his finances in order to pay the client (by ignoring a less annoying creditor, perhaps).

In cases where the Blood-to-Turnip ratio is low, and there are no finances to rearrange, collection agencies are likely to be useless, no matter how hard they work.

I think people need to read and understand that point, because its important, and the 50% cure rates being discussed are wildly overoptimistic. That being said, when folks get into debt trouble they start juggling. The mortgage gets paid, the phone bill goes late because they have 60 days before it goes off, the credit card gets half a payment with a promise for more later, yadda yadda. I think the purpose of the phone call and guilt trip is to get the Prosper bill moved higher on the pile.

Edit: Note also that habits regarding checking accounts are very different for people in different economic strata. If you make $60k a year you might be expect that the natural order of things is for you to get a direct deposit every two weeks into your checking account, which is where the bulk of your disposable income sits until it pays a bill, is debit-carded out to buy a DVD at WalMart, or gets sent to the brokerage. Many folks, on the other hand, get paid with a physical check every two weeks, take it to their bank and deposit a fraction of it, then pay cash for the majority of their daily purposes, their rent, and what have you. If you live in a cash economy, your checking account balance may represent a teeny fraction of your liquid capital at any given time.

Japan, for example, is mostly a cash economy (I pay my rent, phone, gas, electricity, TV tax, and taxes all in cash -- no lie). I have American habits when it comes to financial management, so most of my paycheck stays in my bank account for most of the month, but many folks will be paid their monthly, say, 300,000 yen ($2,500) in cash -- 30 bills in an envelope, and they will carry that around in the wallet for the whole month, and if they have anything left over at the end of the month then THAT goes into the account. My feeling is that the finances of most late borrowers more closely resemble the traditional Japanese model than they do most lender's finances.

Prosper would not need to make money on an in-house collection effort. The signal-effect of Prosper dedicating resources would probably pay for itself indirectly.

The squeaky wheel gets the grease.

It is annoyance, guilt, etc, but also putting the debtor on notice that we're awake and active, and other more difficult things will follow, including credit reporting, court action, garnishment, etc. Then, of course, it is helpful if those things really do follow.

patio11 couldn't be more right. Cash in pocket tends to go faster than cash in a checking account. Most paycheck in hand Americans live this way, IMO.

I think most lenders on here don't quite understand how collection agencies truly work. They believe what they read in the fine print of their credit card statements or what their friends, who also have perfect credit, tell them.

I've received more than my fair share of collection agency calls and have a good understanding on how they operate. I say 'more than my fair share' because I have perfect credit. These calls to me have been in regard to individuals I may or may not know. Blood relatives, neighbors, friends, etc...

They do lie and break the law more than you may believe. Misrepresenting themselves, threating jail time, etc... This is why I don't think they are effective. They may fool the naive but the average Joes catch on quick and ignore everything else they say after the first lie.

What I have learned is if you can make a collection agent laugh, they don't call back. That may differ if I was the one with the debt.

I've told concerned parties close to me to never pay a collection agent. If you can make a payment, pay it to your original creditor, always. Now that I am a lender, I will say it more. This goes to any borrower that may read this as well. Any payment, even if it's not a full payment, will let us know your intention to pay and that you are still alive. Some lenders may not agree but I like to receive some payment over no payment.

Yes.

That's why the default rates are too optimistic.
That's why the 50% collection recovery is too optimistic.


These borrowers aren't typical.

In a conversation with Karen last week, I was told that Prosper in-house was making 2 calls every day.

Once into collection, 3 calls per day are made by the collection agency.

Now, I assume that 2 or 3 calls are made if contact was not successful.

What exactly are the laws on harrassment? And I am guessing they vary from state to state?

Penelope

I think the Fair Debt Collection Practices Act pretty much covers that.
(Overview of the FDCPA at the FTC web site)

States may have their own laws too which are more stringent, but none would/can weaken anything said in the FDCPA.

This part stuck with me from this post.

Let's consider for a moment the quality of loans made at Propser.

Everyone here has their favorite worst-loan-that-should-never-have-funded. I've got a Top-100 of them in my head.

As the skuttlebut goes, Prosper grants loans to people no other lender would touch.

That seems to me that it would make a collection agency's job a lot more difficult. They're used to things like credit card debt, which has a long history and well-established patterns. Also, a fairly consistent minimum for creditworthiness.

Prosper loans have gone to people with 110% DTI, a dozen current DQ's, no job, 25 inquiries, etc. et. al. Sometimes, all on the same loan.

This may have a very big thing to do with the success of these agencies in collecting.

I bet some of the agents really scratch their heads when they see what they're supposed to collect from whom. I bet some of them wish they'd never even heard of Prosper.

So I'm not sure these numbers are telling the whole story. traveler505's account sounds like what collection agencies are supposed to do. But you can't get blood from a turnip.

The FDCPA doesn't apply to the original creditor, so if it's truly an in-house collection attempt, prosper can call as many times as they want. However, if they were to call 10 times a day, a borrower might be able to prove a tort based on infliction of emotional distress.

The law sets the bar pretty high to prove intentional infliction of emotional distress. The average person would have to look at the offense and say "Oh my God!".

Me calling you 3 times per day probably wouldn't meet that test.

Me calling you 10 times per day probably would.

Could x calls a day really mean x call attempts?

A call attempt during the day and a call attempt after normal work hours in early evening?

MMM

appended..

duh.. i repeated what penelope said...

poof

Stupid question. Is that two calls per borrower or two calls per all borrowers? Just askin.

If I got three calls a day from anyone except my wife or mother I would want to strangle them.

This is exactly right. The only hope we have is that people are guilted into paying. Rationally, they will pay the mortgage or rent first. We will probably get paid after everything except doctors. Credit cards will get paid first because the customer gets "rewarded" in having that limit available again for additional spending.

poof

If Prosper sells the debt, all payments are due to the new owner. The advice to pay the lender, not the agent only makes sense if the agent is working on behalf of a lender that still owns the debt.

Also, I'd like to add my voice to the small chorus saying that, if 50% or so is a typical cure rate, then that is too optimistic for the Prosper loans that have gone late. Here's why:

1) 50% probably applies to a seasoned portfolio of debt, meaning that there are a lot of older loans mixed in with new originations. The Prosper portfolio is very new, on the other hand;

2) Loans that miss payments early perform worse than loans that go delinquent later on. Either they never intended to pay, or they are so bad with their finances that they can't meet an obligation 1-2 months after agreeing to it;

3) Many of these early payment-missers (1/2 the balance, if I'm reading it right) are HR or E, which correspond to a FICO well below 600. They aren't going to cure at the average rate, and I suspect the 50% number applies to a set of loans with a little less sub-sub-prime debt.

There's been some good discussion here recently about what the roll rate from "1 month late" (when the collection agency starts their work) to "default" (when the collection agency gives up) should be. Most people offer an opinion approximated by "A cure rate of 50% is wildly optimistic". Perhaps it is. Most give no data to back up their position.

Real data is hard to come by of course, and when you find some it isn't clear that it applies to the Prosper situation. You might ask "What does Prosper think about this?" They haven't given us a public answer ... until now.

Buried deep in the help page for the new group rating system is this chart:
(IMG:http://img.villagephotos.com/p/2006-6/1187065/prosperlossrates.JPG)
This table provides loss estimates which allow Prosper to weight various degrees of lateness when they compute the group rankings. But hey, if these are Prosper's best guess at loss estimates, then we can use them to compute what the collection agency's performance would need to be to achieve these numbers.

Lets begin. We want to compute a roll rate, that is the fraction of loans which will proceed to default, given that they have become 1 month late. This is not directly readable from the table, because the table contains expected loss. However, we can compute the roll rate from the table. To do that, we divide the numbers in the "1 month line" by the numbers in the "default" line.

Roll rates: 64.44% for A-E loans, and 81.05% for HR-NC loans.

Unfortunately, prosper only reports one number for the collection agencies. They don't split it out by credit grade. That means we need to average these two numbers. To do that, I looked up the relative fraction of "1+month late" loans in each credit grade.

Frac 1+month late: 49.42% are A-E loans, and 50.58% are HR-NC loans.

Using these weights to compute a weighted average of the roll rates above, I get

Expected roll rate for the whole prosper portfolio from "1 mo late" to "default" = 72.85%

Now, the statistic that is reported for the collection agencies is a success rate (cure rate), not a failure rate (roll to default), so we have to subtract the above number from 100% to get the expected fraction of loans cured.

Fraction of loans cured = 27.15%

Well there you have it. Using Prosper's own published numbers for expected loss, we've computed the collection agency cure rate that would be required to achieve that expected loss, and it is about five times larger than the present performance of the collection agency.

This calculation doesn't immediately answer the question of whether the problem is in the quality of the loans or the quality of the collection agency. It is however another piece of evidence that there's a big disconnect somewhere.

PS: If the collection agency performance doesn't improve, then the loss rates int he table above are way too low. What effect does this have on the group rating system? It causes the system to underweight recently-late loans, which will have the effect of overrating relatively new groups and penalizing older groups. However, if the collection agency performance doesn't improve, this is the least of our problems.

I wonder how these numbers (in the chart) are derived? Are they scorex based? Or based on actual Prosper experience? Because if these are scorex based, and we are doing worse than that, we're all hosed.

The collection statistics have updated again. The following image was snapped on 10/30/06. The big picture is still the same. Once loans go 1 month late, only about 5% of them are being cured, which seems to mean that something like 95% of them are headed to default. I've circled the critical number.
(IMG:http://img.villagephotos.com/p/2006-6/1187065/prospercollections22-2006-10-30.JPG)

I've graphed these numbers vs time, so we can see whether the situation is improving or not.
(IMG:http://img.villagephotos.com/p/2006-6/1187065/prosper-collections-rates_29592_2006-10-30.gif)
Well the numbers do bounce up and down from week to week, but total cured isn't really movin' to higher ground. We're stuck at around 5%.

This is scandalously bad. (hence the name of this thread)

It would be nice to see some information about the loans that have been brought current by the collection process. I seem to recall that they're all in the prime grades.

It's interesting that the gross collected is more than double the accounts brought current. What does that mean? That bigger loans have been more likely to come current than the population of delinquent loans in general?

At 4.71%, that means 9 loans have been brought current.

Yeah...

I've been looking at the loans for the last week or so -- and nothing really looks that great to bid on... maybe just one or two, but those bid the interest rate down so low that 8% on an unsecured loan just doesn't cut it.

Anyway -- I just transfered my free cash out of prosper. I think I'll let my loans stew for another few months before I do any more bidding.

I just have a feeling we're going to see a huge influx of bad loans that originated since August.

Per the suggestion in this thread (?) I switched my collection agency to NTI a few weeks ago... so we'll see if they do any better :)

It might simply mean that there have been a bunch of payments which are not sufficient to bring the loans current. If a loan got to >1 month late, it would go to the agency. If the guy then paid every payment after that one month later than it was due, the loan would stay at the collection agency, but never go current and pop out. So all those payments would add into the gross collected.

Yep.

Woo hoo. One more loan in collections has gone current!

The following image captured 11/07/2006
(IMG:http://img.villagephotos.com/p/2006-6/1187065/prospercollections23-2006-11-07.JPG)

4.9% = 10 / 204

Last I looked the numerator was 9. Now its 10.

It is apparent that community payments include payment to collection agencies.

What does this mean for the statistics?

If community payments count as cures, then even these crappy statistics are upward-biased, since community payments aren't caused by collection agencies.

If not, they may bias the rate slightly down, since the collection agency might see the loan snapped back to current before they really get to knuckle down on it, inflating the denominator.

Community payments should be broken out in the statistics.

I just updated the chart with 11/15/06 data. Something good is happening. One of the curves on the following chart is pointing up!
(IMG:http://img.villagephotos.com/p/2006-6/1187065/prosper-collections-rates_29592_2006-11-15.gif)
The fraction of loans cured in collections isn't moving up. Its hovering between 5%and 6%. However, the net $ collected fraction is going up up up. Its not entirely clear what is causing this. My theory is that the collection agency is getting more partial payments. (ie they get some money from the borrower, but not enough to bring the loan current) That's better than nuthin'! It indicates more or better activity inside the collection agency. Maybe they're gettin' on the ball and its gonna keep going up, eh? That would be good.

If the cured fraction doesn't go up, then it still means that something like 95% of the loans that go 1 month late will default. That's still really ugly, but I'm really happy to see somethin' goin' up.

Oh yea, and the numbers: At this point 13 loans have been cured of 229 sent to Penncro.
5.68% = 13 / 229

The latest stats show that net collected is up to almost 16.5% !

Are we seeing good collection results on larger loans to get this jump?

I won't call it "good collections" until a much larger fraction of the loans start getting cured. This must be due to an increased effort at collecting partial payments. I see no other explanation. (...except... knowing the history of Prosper, perhaps it could be delayed recognition of something.)

So, are lenders seeing a lot of partial payments from loans that are >1 mo late? I haven't see any on my loans.

The last two data points on this chart are 11/22 and 11/25. Between them there was no change in cures at all, so this can't be caused by which loans are getting cured.
(IMG:http://img.villagephotos.com/p/2006-6/1187065/prosper-collections-rates_29592_2006-11-25.gif)

6.53% cured = 16 / 245
In other words, of 245 loans that have gone >1 month late and been sent to the collection agency in the entire history of Prosper, 16 have been cured.

I've seen some on this loan. One payment on Nov 2nd and another one in the pipeline. Both not for the original repayment amount.

Aimee's (abrittain) recent payment was partial.

ETA link:
http://forums.prosper.com/index.php?showtopic=6941&hl=

This post has been edited by Urbi_et_Orbi on Nov-25-2006 04:07 PM

Updated chart.
(IMG:http://img.villagephotos.com/p/2006-6/1187065/prosper-collections-rates_29592_2006-12-16.gif)
Looks like the big jump up in "net collected" in late November was a glitch in the data which has been corrected. Nothing much has changed. The drop in each of the numbers between yesterday and today was due to a new batch of delinquent loans being dumped on Penncro.

There have now been 23 loans "cured".
7.35% = 23 cured loans / 313 loans sent to Penncro

Updated chart.
(IMG:http://img.villagephotos.com/p/2006-6/1187065/prosper-collections-rates_2007-01-06.gif)

Very little has changed. Of those loans that go > 1 month late, about 7% are being cured, which means almost all of them will default.

6.95% = 25/360 so 25 loans (or so) have been cured.

There are now a few concerns about the integrity of this data. First, the numbers prosper gives us don't quite add up. The following was captured on 01/07/07.
(IMG:http://img.villagephotos.com/p/2006-6/1187065/prospercollections24-2007-01-07.JPG)
The "accounts brought current" line should be the sum of the three lines below it. However, 4.17% + 2.78% + 0.00% = 6.95% whereas Prosper shows 7.5%. Not a large error, but it is annoying. How could someone write code to add three numbers and get it wrong? Is this evidence that these numbers are calculated and entered manually?

Another problem involves the evolving story of group leaders making community payments to boost their star ratings. I believe that FAN has done this four times so far. We don't know how many times other group leaders have done this.

Before a community payment can be made, a loan most go at least 1 month late. According to Prosper's policies, when a loan goes 1 month late, it is sent to a collection agency. Once loans are sent to an agency, they should appear in the agency statistics. If so, then some of the loans shown as "cured" will have been "cured" by community payments rather than by the actions of the collection agency. So it is possible that FAN's 4 community payments are 4 of the 25 "cures" shown in the collection statistics. That's beginning to be significant. (And we don't know how many other loans have been brought current by community payments.) On the other hand, although it is Prosper policy that loans go to collections at 1 month late, it is possible that there is a delay. The collection statistics do not increment immediately when new loans become 1 month late. It is possible therefore that there is a time window after loans go 1 month late and before they go to collections during which it is possible to make a community payment and not have the cure counted in the collection statistics. We just don't know. In any case, the effect, if present, makes the collection agency statistics look better than they are.

I was just thinking about this the other day and wondered if anyone else had thought of it.

Based on this post by FAN I'm going to guess that the collection agency is not receiving credit for FAN's "cures" since the payment breakdown given in that post does not include any collection agency fees. From what I've seen, FAN is very proactive about making those community payments so that 1-month late loans are brought current very quickly.

On the other hand, I don't know if a collection agency gets credit for a "cure" if it actually receives a loan that later gets a community payment large enough to bring it current.

I think its a BAD POLICY to send accounts to collections that are just 30 days late.

A good number of these borrowers are chronic late payers, but PAYERS- so let em pay late and get the late fee. 30 days is just too quick a time to send someone to collections; 60 days or two payments, probably alot better.

My thought on it is that as a borrower- I would think- hey, they already sent me to collections- screw them, they didnt even give me a chance-

Granted, they should all pay on time, but they dont. But a good number pay late all the time- so why not give them a little more time, to do that. Prosper can send emails to notify them- they need some in house collection-

It sure beats losing the money entirely, which is what you get with these collection agencies-who, no matter what any of them say, often hire some real winners ( sarcastic) to call borrowers, and aggrevate them more.

and you get in my opinion the borrower getting a bad taste in their mouth and getting upset bc now they are in collections, and NOT dealing with Prosper, who they had the relationship with in the first place.

THe loan just becomes another collection acct- too late, nothing I can do, etc.

pninen ;

My info may be useless on your topic but I can tell you something about that company.

My sister is a, well..

anyway, she owed money & was turned over to a collection agency, which was this one. I know by the name & by messages left at our parents house looking for her.

to the point. their cs is pretty bad. I mean one rep she talked to when my sister said "you can't get blood from a turnip" offered into a "telephone tough person" battle. & Also offered to meet her in person if she was ever in the state in which the rep was from. Now I can't vouch & say that company is the excat one on the phone because since I have never had to deal with a collection agency, I don't know if they sell them to lower companies or what, but that name was definately the one on my parents answering machine.

I don't believe Prosper is following this policy. I had a loan go 1 month late, then come current again - and no collections fees were taken out of the payment - which indicates to me the account was *NOT* sent to collections.

The loan in question was this one.

Of course what *may* have happened is that the Prosper CSR said something like "this is the last call you're going to get from us before we send you to collections," which was what caused a payment to be made, but there's no way to know that.

- Argonaut

Thanks for pointing this out. A bug has been filed for this issue.

The problem is that the accounts brought current "in months 3+" line is always, incorrectly displayed as 0%. In the case of your example, the numbers should be 4.17%, 2.78%, & 0.55%.

Wow - what just happened to the collection stats?

:blink:

IMHO the credit agencies do not have enough time to work out the problems before Prosper packages up the loans and sells them. I have had judgements in Real Estate leasing over the years and it is sometimes 3-5 years before collections occur. For the record I am not opposed to the quick out that Prosper takes - the time value of money is a consideration.

:blink:
I've used a local collection agency for the past 8 years. They are aggressive and have a contract with the city to collect on traffic tickets. That gives them access to current address info etc.

I've found that it takes 2-3 years to get any money back after you've turned in a client to collections. That is because the collection agency gathers up bad debts and then presents a larger amount for garnishment, etc.

The return will be less on a national firm. My firm is local and goes after people that live within the area.

Here are my agencies stats after 8 years of doing business with them.

28% actively being collected on
31% have gone into BR 13 or 7
17% statue of limitations has expired, therfore no money collected
6% now have legal judgment against, waiting for garnishment hopefully
13% had legal judgment and some money collected so I got 60'% of my money back
4% paid in full without any legal. My deal with the collection agency is that I get all my money back that is collected, if there is no legal action taken. They get misc fines that a collection agency can attach to the payment, per state law.

Doesn't work that way here. Lenders are SOL in 121 days.