After the first email regarding my defaulted note in Fundaztic, I finally received an update after six months. So what’s the news?
Bankruptcy notice
In the email, it is stated that Sealed Judgement Order was obtained and served in early of the year. Fundaztic (Link) has instructed lawyers to file for bankruptcy notice in February. However, until now, the date and time for the hearing have not been confirmed yet. Thus, there is really nothing much from this update.
Write-off/Bad debts
There are some changes to the management of defaults on this platform. For notes that have defaulted for more than 180 days, they will be classified as Write-offs. If repayments are received (would be lower than the original repayment sums), the note will be classified as Restructured instead.
According to Fundaztic, this new policy is meant to help investors to write off the investments that have low likelihood of recovery. This will also help us to prepare our tax filing as we can deduct the write-offs from the interests earned. If there are recoveries, the amount can be added to earnings of the year for income tax purpose.
Change in presentation of note status
The defaulted notes that have fallen into the abovementioned category will be classified as Write-offs/Restructured in the Notes Status box on the homepage of the website.
Change in default rate
There will be lower defaults on the platform once the new changes are implemented. Fundaztic does not treat the write-offs as defaulted notes anymore and remove them from the calculation of default rate. But I think that this is just a change in appearance to dress up the number, not a real change in the default rate.
Conclusion
In the end, I am still unclear about what will happen with my defaulted note but I have treated it as a total loss. I will update again if I receive any information regarding the note in the future.
As for the change in policy of management of defaults, I think that it will have not much impact on the investors. It might make the bad investments clear but the losses are still not recouped. I personally think that those write-offs should still be treated as defaults but it is up to the platform to draft up its own policy.
