She made a payment at the end of August, 4 months before the loan was sold, which brought the loan from 3 months late to 2 months late.
It's not an exemplary payment record, but it's certainly not one which would cause me to give up all hope and dump the loan for a pittance and a tax write-off at the first opportunity.
Well when DO you decide to sell it? Back we go to that question again. Personally if it was a debt that was owed to me and had been in collections that long with that sporadic a payment, I would have sold it for pennies on the dollar. I know I've written off debts (I do my own collections and have never sold a debt) much sooner than that. IMO it's just not good business sense to "hope" that someone might be that small fraction of a percentage of people who will catch up completely at some point.
Ideally, you would have someone apply their good judgment to the situation, and make a judgment call as to whether it is in the lenders' best interest to wait or to default -- i.e., is there is a reasonable likelihood of additional payments or whether it is simply time to cut your losses. After all, 1 or 2 additional monthly payments is likely to be more than what the JDB will pay (and MUCH more than the decrease in what the JDB will pay in the future as opposed to now -- which is the cost of waiting). In the case of this particular loan, the payment history would suggest patience to me. This borrower is someone who apparently was in constant financial crises, yet came current 4 times during the life of the loan (3 of which followed 1 month lates), and paid another month's payment after being 3 months late. Barring additional information that we are not privy to (such as the borrower telling Prosper that he/she would never make another payment), it seems to me from the repayment history that this borrower may well have made additional payments down the road. If it were up to me, I would have waited.
However, there are two major problems with the above approach. First, and most importantly, as we have seen again and again, Prosper generally does not have good judgment, and it does not usually act in the lenders' best interest. Thus, the chances are too high (and the perception would be nearly universal) that Prosper's decisions would be colored (if not overwhelmed) by its OWN self-interest -- for example, delaying defaults as long as possible in order to artificially keep its default statistics as low as possible (and thus its ROI stats as high as possible), in order to put out more appealing press releases and advertisements. Second, the Lender Agreement does not authorize Prosper to make such determinations (and probably that's a good thing due to the first reason above).
This is a perfect example of why it is so unfortunate that Prosper is as incompetent and unethical as it is. Had Prosper chosen a different path, lenders would have given Prosper the authority to act in their best interests in such matters, which would have benefitted lenders (and thereby Prosper). But Prosper squandered the trust and good will it had, so now lenders would have to have rocks in their heads to allow Prosper the authority to further manipulate the already misleading default statistics.
