In July 2019, I encountered my first defaulted note on Funding Societies Malaysia after two years with the platform. Today, I am glad to say that I have recouped my principal and thus, suffer no loss from this delinquent note.
What happened?
Funding Societies Malaysia managed to get the note issuer to settle the outstanding principal after a 4-month delay. However, the platform is still waiting for the issuer to pay back the outstanding interest.
Up till this point, I have received 14 repayment notes from Funding Societies Malaysia regarding this note.
Management of defaults
I have received an email from Funding Societies regarding its management of defaulted notes. This email provides more details than my previous article, so I am going to share it here.
There are three ways the platform takes to deal with defaults.
1. Restructure the note
This means lengthening the tenure, thus reducing monthly repayments. This might entail increased interest rate.
2. Engage debt collection agency (DCA)
If the issuer is uncontactable or repeatedly break their promise-to-pay, the debt collection may be outsourced to a DCA. The fee of DCA ranges from 18 – 25% of the successfully collected amount.
3. Take legal action
This is the last resort due to the higher fees and unpredictability. The time needed to settle the whole process ranges from 6 – 24 months.
Conclusion
Defaults are inevitable in peer-to-peer lending but I feel how a platform handles its communication and the recovery process is very important. I am very satisfied with the way Funding Societies Malaysia handles the defaulted note. It constantly updates the investors regarding the process. I am quite happy that this default is reversed and I might even have a chance to receive the interest too.
Referral link
Below is the referral link to Funding Societies. By clicking on this link, I may gain referral rewards from your registration with the platform. If you think I have done a good service in explaining the topic, please click on the link below if you have interest to register. Otherwise, you can always search Funding Societies Malaysia with Google and register yourself.
Funding Societies Malaysia: Link here – If you register and invest through this link, both of us will get RM 30*.
*Terms and conditions apply.