What happens when P2P loans default? - Seedly



Asked by Anonymous

Asked on 17 Jun 2019

What happens when P2P loans default?

I have some loans in fundingsocieties that got defaulted. What happens then?


Answers (2)

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Thaddeus Tan
Thaddeus Tan, Community Lead at Seedly
Level 6. Master
Updated on 18 Jun 2019

Hi anon, I’m answering this question assuming you are asking from an investor’s pov.

TL;DR It depends!

What actually happens to an investors’ money when the loan is defaulted? Well to put it simply, it really depends on the different P2P companies. Different P2P companies have different measures as to how they will deal with a loan default. Generally, every company has a mulit tier level of response which is also dependent on how the company defines 'defaulted' and also the period which the loan is defaulted...

For a start,

Most P2P companies will always try to contact the borrower and work out how best the borrower can repay the loan. P2P companies will be open to negotiate and discuss the possible courses of action. Should this fail or the borrower does not cooperate... the next course of action will be adopted.


A third-party professional debt collector will be hired by the respective company to collect from the borrower the unpaid amounts. Should this still fail...


If the borrower still doesn’t return the money, legal action will be adopted. Having said that, different firms might have different approaches when it comes to dealing with P2P loan default. The above is just a general guide as to what most companies will do when there is a P2P loan default. You should still contact the company and their management team to find out exactly the procedure they will adopt when P2P loans default.

Hope this answers your question!


Ernest Yeam Wee Leong
Ernest Yeam Wee Leong
Level 6. Master
Answered on 18 Jun 2019

If the loans in p2p get defaulted, it means that the borrower has failed to make repayment.

What happen nexts could be the platform tries to get the borrower to do partial payment or persuade them to make repayment at a longer period. if the company does not pay, the platform may get a debt collector to make the borrower pay. End of the day if the borrower really has no money and declares bankruptcy, then your money is gone.

Experienced something similar of a company default and wrote my reviews about it here. http://justbeingernest.blogspot.com/2017/07/moolahsense.html