What happens when a P2P borrower defaults payment / goes bankrupt? (Asking from a P2P-lending investor POV)

Hey there, I am Cass, the community manager at CoAssets! 

I am unable to comment on behalf of other platforms, however, I hope that I would be of help explaining the processes of CoAssets. 

Unsecured loans are loans without collaterals. In the event that the P2P borrower defaults, within 30 days from the maturity date, CoAssets will schedule face to face meetings to remedy the fault, restructure loan if possible and inform affected investors. 31 to 60 days upon maturity, a third-party professional debt collector will be hired to collect from the borrower the unpaid amounts. 61 to 90 days upon maturity, CoAssets will obtain the Power of Attorney from the affected investors to act on their behalf. Anything more than 90 days upon maturity, legal proceedings will commence against the borrower. 

P2P lending are considered high risk investments. There is always a chance where lender might lose 100% of principal pledged. In order to make a more informed decision, always make sure to do your own due diligence before participating i.e. Default Rate %

I hope I answered your question 😄

I have personally experienced as a investor on a p2p platform whereby the borrower went burst.

Wrote about it here http://justbeingernest.blogspot.com/2017/07/moolahsense.html

As a investor, you will not get back your money since the borrower is not able to pay back the loan. Depending on the p2p platform, action will be taken to get back money from the borrower although the chances of recovery will be low.

If you lend them they money and they default, you might lose the money you left them. Although some loans are secured, i.e. backed by assets, liquidation of assets might ultimately not able to pay off the loan completely due to various reasons. Further, it will be a time-drawn issue. Thus, you can consider your loan a write-off and the money is gone; focus on earning back the losses elsewhere.

I guess that's the beauty of p2p lending platforms; you get to just loan small amounts per investor; so even if the borrower defaults, you lose $20. $50,. $100. $500, $1000 etc instead of $10k, $100k?

Lesson? Invest what you are willing and able to lose.

Another way you could look at defaults payment is earning more (though the chance is low). Find out why the payment is defaulted? do they have a guarantor to back them up to return back the investors' money in case of defaults?

The most important things like what adele said are learn from the reasons behind your loss and carry on focusing on earning back the losses.

No point crying over spilt milk.

You may lose all of your capital that you lent to them.