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[Mtnchick]

Legal Test Update

Friday, May 9th, 2008

I wanted to give everybody a quick update on collections. I know that many of you are anxious for an update on the debt sale. Regretfully, I have nothing to tell you yet. I expect to have another update on this subject early next week (Monday or Tuesday).

In the meantime, I want to give you an update on the accounts in the legal test. We have obtained service on 12 of the suits – and have sent “proof of service” back to the courts. Another 41 have been formally entered on the dockets of the court in and are currently out for service. I would believe that some number of these have been served, but we only have a “batch” interface with the process servers, so I don’t have real time date on this. Finally there are 7 suits on which we are waiting for the “file stamped” copy back from the court to send out to service.

At this point, we keep pushing for service. Once we have received proof of service, the minimum time to move for default judgment is 30 days. As a rule, the law firm will wait until 45 days after the service date to file a request for default judgment. Thus far, none of the defendants have “answered” the suit.

On other topics, I will be making my monthly trip to AmSher on 5/15 & 5/16. I will dedicate another posting to the current state of collections and AmSher after I return.

Bolding mine.

Hell, tell us you don't HAVE any updates, but don't jerk us around saying you're going to have info, list specific dates and then disappear into the fog. 

[mjerryfirst]

Mr. Fuller's statement seems perfectly reasonable to me and to anyone else who has been involved in debt collections.

[big-al]

Mr. Fuller's statement seems perfectly reasonable to me and to anyone else who has been involved in debt collections.

But where are the promised updates?

[Fred93]

Mr. Fuller's statement seems perfectly reasonable to me and to anyone else who has been involved in debt collections.

Fine except for the chronology, which you can find here
http://www.prospers.org/blogs/Fred93/2008/05/06/prosper_com_the_lawsuits_begin
Faster would be better.

[mothandrust]

Mr. Fuller's statement seems perfectly reasonable to me and to anyone else who has been involved in debt collections.

But where are the promised updates?

They are >15 days late.

[cowdog]

Mr. Fuller's statement seems perfectly reasonable to me and to anyone else who has been involved in debt collections.

But where are the promised updates?

They are >15 days late.

There won't be an update even if it goes 4+ mos late. It will just be forgotten like an old Prosper loan...

[yankeefan]

UPdate tonight

Debt Sale Update
05/30/08 posted by Doug Fuller

I know that many people have been anxiously waiting for an update on the debt sale.  We’ve been working very hard toward finding a more favorable bid, as well as considering alternatives, but we’ve met with some severe obstacles.

Once bids with unacceptable contract conditions were eliminated the highest bid we received was only 1.5 cents on the dollar.  To put this in context, “Out of Statute” paper - consumer debt that is time-barred by the statute of limitations, where the debt holder has not received a payment in 3 to 15 years - gets prices in the range of 0.5 to 0.75 cents.

The problem is that there is so much credit card paper available in the market, that no one is interested in a “novel” asset such as Prosper loans.  More than one bidder had told me that in this market, they’re only spending their money on consumer debt paper they’ve had experience with.

We believe the prudent course of business is to not sell at this time.  Instead, we are going to consider the loans as charged off, and keep them and continue to try to collect them as charged off debts.  You will continue to own the loans as we apply post charge off collection techniques to these accounts.  We recognize that this is different than our normal process, but firmly believe that it will result in a higher return for our lenders.

One of the key arguments for selling bad debt quickly and without applying “post charge off” collection techniques, is that it reduces the value of accounts that don’t respond.  However, given the very low price we’re currently faced with, that’s not really a concern.

Several people have expressed concern regarding how 121+ dpd loans are reported.   We are working to create a new loan status of “charged off”.  Loans in this status will not have their balance “zeroed” out (so that they can still accrue interest), but they will not be eligible to revert to a “current” or “delinquent” status even if a payment is received.

—

[Mtnchick]

I don't even know what to say. 

[pioneer11]

I don't even know what to say. 

You said it well in the other thread.

[Mtnchick]

I don't even know what to say. 

You said it well in the other thread.

Yeah, gotta keep The Lobby clean

[Xenon481]

Wow.

[Mtnchick]

Since they aren't selling them and are basically treating them as they are all late loans, they should put every single account that is 121 days late into the "charged off" category so that their numbers remain true. Surely even those who were screaming "Don't sell them off too soon!" can agree with this.

[Xenon481]

What are the tax implications of a "Charged Off" loan?  Can I deduct it on my taxes just like a sold/defaulted loan?  If I can, how do I have to then later account for payments received in the next tax year?  What about if it ever actually sells in a different tax year from the charge off date?

[snake]

What are the tax implications of a "Charged Off" loan?  Can I deduct it on my taxes just like a sold/defaulted loan?  If I can, how do I have to then later account for payments received in the next tax year?  What about if it ever actually sells in a different tax year from the charge off date?

why don't you ask doug fuller that?

[Xenon481]

What are the tax implications of a "Charged Off" loan?  Can I deduct it on my taxes just like a sold/defaulted loan?  If I can, how do I have to then later account for payments received in the next tax year?  What about if it ever actually sells in a different tax year from the charge off date?

why don't you ask doug fuller that?

I have submitted that question to the blog.  It is pending approval.