ZOPA has sold a batch of defaulted loans to a debt collection agency, which it says will enable a faster and higher recovery for investors.
The peer-to-peer consumer lender informed its investors last week about the debt sale. It said that it has received upfront payment for the loans in question and will pass on the proceeds to investors within the next couple of weeks.
“It means that our investors will receive a faster, and likely higher, recovery on some defaulted loans in their loanbook,” Zopa said in an emailed statement to Peer2Peer Finance News.
Zopa did not disclose the size of the debt sale but said it would not be making any additional revenue from the deal.
The platform added that the loans were all in default at the time of sale and had not been making payments “despite working closely with our borrowers to find appropriate payment arrangements that work for them.”
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The defaulted loans have been sold to a Financial Conduct Authority-regulated debt purchasing firm that Zopa said it chose after “an extensive selection process”.
“They take a long-term view of making recoveries, and share our values of treating people fairly and compassionately while also working towards the best possible repayment outcome,” Zopa added.