goPeer’s collections and recoveries team pursues every single late or defaulted loan to recover as much as possible. We use a variety of methods and technologies that analyze the specific financial situation of each borrower to maximize your recovery.
When a loan defaults and a full recovery becomes less likely, then the loan will be charged-off, and your account will show a total loss of principal on the affected Note. We will however continue to pursue recoveries, so it’s worth remembering that the amount lost on recent defaults may improve over time.
goPeer takes delinquencies and charge-offs very seriously, we invest considerable time to understand and learn from each one, including routine analyses of the data to continuously learn, improve and optimize our underwriting model.
Missed Payments & Delinquencies
Missed payments happen, and while most are promptly resolved, the odds of recovery diminish the further along a delinquency progresses. Our recovery team therefore promptly jumps into action to communicate with the borrower, while simultaneously an automated e-mail sequence activates to ensure the borrower is immediately alerted and reminded of the situation.
The loan status will initially transition into a "GRACE" status, providing the borrower up to 15 days to complete the missed payment, typically without consequence (unless this is a recurring behavior). Once the payment reaches 16+ days late, it is considered late, interest begins to compound, and the borrower's relationship with goPeer and their ability to borrow in the future is impacted. Once a loan reached 30+ days late, it is reported to credit bureaus and will begin to degrade the borrowers credit file and score.
When the borrower is responsive and cooperative then it serves them well, as our team is exceptionally understanding, kind and supportive. We will happily structure a plan to help the borrower manage the situation, if necessary deferring, reducing or skipping payments (interest always continues to accrue), or in extreme cases we will approve a hardship plan where the loan term may be extended by up to two years to lower recurring payment amounts. All decisions are always made in the best interest of our investors.
When a borrower is not responsive or cooperative then our communications will quickly escalate, including e-mails, phone calls, text messages, direct messages on social media, demand letters by mail, and contact attempts through their employment as well as through family. Depending on the circumstances, we may proceed to small claims court to seek a garnishing order, or we may retain a third-party collections agency.
Bankruptcies & Consumer Proposals
Bankruptcies and Consumer Proposal are issued by court order, and are federally regulated by the Bankruptcy and Insolvency Act.
There is no opportunity to negotiate in the event of a bankruptcy, however goPeer thoroughly reviews the court documents for accuracy, and will file a complaint to oppose or negotiate the terms of the bankruptcy. An opposition however will only be filed when we have substantial evidence that the borrower is capable of repaying their debt at a higher rate, or if the borrower made false claims.
A Consumer Proposal on the other hand is a proposal that must be accepted by a majority vote of creditors. A CP will typically provide higher recoveries than a bankruptcy, with recoveries usually ranging from 15% to 60%, but which are most commonly around 30%. Considering the best interests of investors goPeer frequently challenges consumer proposals, and when having votes in our favour are very effective and negotiating higher recoveries. CP recovery installments are typically made over a five-year term, with initial payments allocated to court fees, trustee fees and taxes, so we do not expect to begin receiving recoveries until the second year. When received the net recoveries are distributed proportionately to noteholders - goPeer does not make any deductions or charge fees on recoveries.
Bankruptcies and consumer proposals have a substantial impact on the borrower's credit file, and will result in a long-term financial impairment, making it difficult to obtain anything from a credit card, loan, mortgage, rent agreement, auto financing or even a cell phone for the next 5-7 years.
Structured Debt Programs
Structured debt programs may include provincially court ordered arrangements, as well as privately structured programs. A structured program is typically preferred to a bankruptcy filing or consumer proposal, as they generally provide a higher rate of recovery, and paid over a shorter duration. As a structured program with higher recoveries, the borrower's credit score is not as severely impacted, but will nevertheless be impacted, hindering their ability to obtain credit or related financial services for many years.
The three primary types include: Orderly Payment of Debt (OPD), a court issued arrangement available only to consumers in the provinces of Alberta and Nova Scotia, and which is administered on behalf of the borrower by a third-party provincial credit counselor. Similarly the Dépôt Volontaire (DV) structured program is a court issued and administered arrangement available only to consumers in the province of Québec. For both of these the arrangement does not reduce the borrower’s debt, but reduces the interest rate to a fixed 5% per annum, and consolidates payments into a single recurring payment managed and distributed by the counselor with a payment period of up to three years.
Credit Counselling (CC) is a structured debt repayment agreement with goPeer, a program facilitated on behalf of the borrower by a third-party credit counsellor. In the case of credit counselling, goPeer first attempts to negotiate directly with the borrower to establish a hardship plan, including a term extension and lower payments with the goal of maintaining the standing of the loan and the health of the borrower’s credit score. While acting in the best interest of our investors, we nearly always challenge and negotiate the terms presented to ensure the best outcome for our investors.
While subject to a structured debt repayment program the loan status within goPeer will appear to investors as “STRUCTURED”, and payments will begin to be received typically within 1-2 months. Unlike regular payments where accrued interest is paid before principal, structured loan payments will have the full amount of the payment allocated to principal – interest will continue to accrue but deferred until all outstanding principal is paid first. Only after all principal is repaid will the remaining payments be allocated to accrued interest.
The loan will remain open until all principal is repaid, after which it will transition to a closed and settled state; if the principal is not repaid in full, then the remaining principal will be charged-off and the status will become closed and charged-off. In the case when a portion of interest is paid under the program, then interest only settlement payments will continue to be received following the closure of the loan.