A payment is late: what happens next?

Repayments are on time in 97.4% of cases. With a comprehensive process preceding the offering of a loan, Lendahand does everything possible to limit delays and prevent write-offs. However, it can happen that a payment is not made on time. On this page, we explain what you can expect from Lendahand in terms of approach and communication.

 

The First 30 Days

If a repayment is on time, we transfer it to you within two weeks. Occasionally, a payment may be unexpectedly delayed. Issues can sometimes occur with international payments, but we resolve them quickly in consultation with the borrower and the bank. Most delayed payments are still made within 30 days.

If a payment is more than two weeks late, we will inform you in week three. We will send you an email explaining the situation and whether it involves a temporary or structural issue.

 

How a Late Repayment Appears in Your Financial Dashboard

A repayment is only officially considered "late" if it has not been received 30 days after the due date. On the "Investments" page in your account, the loan will then move from the "Active Investments" tab to the "Written Down" tab.

 

Write-Downs

Once a missed repayment is classified as "late" after 30 days, Lendahand will adjust its value downward. Future repayments will also be valued lower, based on the expectation that only part of the loan will be repaid.

The value of your investment decreases accordingly. This is reflected in your dashboard under "Total Amount Receivable" and in your annual overview, which also lowers your taxable assets.

The longer a repayment is delayed, the greater the write-down, and the lower the estimated value of your investment. Write-downs follow a fixed schedule:

• 30 days late: 20% write-down
• 90 days late: 50% write-down
• 180 days late: 75% write-down
• 360 days late: 100% write-down

A write-down is different from a write-off. A loan is only written off if the borrower has been declared bankrupt and the bankruptcy process is complete. As this process can take years, we believe it is important to gradually write down a delayed loan to give you the most realistic view of your investments' value.

 

How a Write-Down Appears in Your Dashboard

The new value of your loan will appear on the investments page, in your financial dashboard under "Total Amount Receivable," and in your annual overview. Including the written-down value in the annual statement ensures you do not pay unnecessary wealth tax.

It is possible for a loan to appear under the "Written Down" tab even when repayments for that loan are on time. This occurs if a repayment for another loan by the same borrower is delayed. In such cases, all active loans by that borrower will be moved to the "Written Down" tab.

 

Restructuring

If a borrower cannot meet their payment obligations, Lendahand enters discussions with the borrower. These complex conversations often take time. If it seems likely the borrower can still meet their obligations, we agree on a restructuring of the repayment schedule. This agreement includes:

1. New repayment dates.
2. The percentage of the remaining debt to be repaid.
3. Whether or not interest will be repaid.

It is possible to reach a restructuring agreement where the borrower does not repay the full amount. In such cases, part of the loan is written off. Sometimes, writing off a portion of the repayments can increase the chances of recovering a partial repayment.

 

Bankruptcy

If discussions reveal that the company cannot meet its payment obligations now or in the future, the bankruptcy process begins. This process varies by borrower and country. Generally, it involves the following steps:

1. Default Letter: Creditors initiate the bankruptcy process with a default letter.
2. Appointment of a Trustee: A trustee is appointed to facilitate the bankruptcy process.
3. Sale: The trustee assesses whether a sale or restart of the business is feasible. If sold, the buyer typically agrees to a settlement with creditors, often resulting in restructuring. If a sale is not possible, the trustee proceeds with the next steps.
4. Creditor List: The trustee determines which creditors are entitled to which portions of the debt and establishes the priority of creditors.
5. Liquidation and Distribution: The trustee liquidates as many assets as possible, and the proceeds are distributed among the creditors.
6. Payout to Investors: Lendahand then determines which investors are entitled to which portions and transfers the funds to their wallets. This often involves significant write-offs.

 

How Bankruptcy Appears in Your Dashboard

While the bankruptcy process is ongoing, any outstanding debt will appear in your dashboard as a write-down under the "Written Down" tab. Once the process is complete, the loan will move to the "Written Off" tab.

 

Communication About Payment Delays

Here is what you can expect from Lendahand regarding communication about a payment delay:

• Week 3 Email: If the repayment is still not made three weeks after the due date, we will send you an email with details.
• Monthly Follow-Up: For up to six months, you will receive a monthly update via email as long as the repayment remains unpaid, even if progress is limited. All updates are also available in your account under the "Delays" tab on the investments page.
• After Six Months: If a payment is delayed for more than six months, you will receive an email update upon one of the following events:
  • A restructuring agreement is reached.
  • You receive (partial) repayment.
  • A formal write-off occurs.
• Ongoing Support: If you have specific questions about a delayed repayment, you can always contact our support team at [email protected].