Filing Pro Se, need help with Prosper loan

[xaviationud]

Hello, I'm currently filing Chapter 7 Pro se, and am on Schedule F. I've put down all the addresses, account numbers and balances for my credit cards, but I am clueless of what to put for a prosper loan. Any ideas?

[HHM]

I suppose you would use the website contact info. Just drill through the website, at some point you will probably find an address. Look in the terms of use.

[dingdong]

Just list the address on your statement.


Here is a link to their policies.

http://www.prosper.com/policies/borrowers-bankruptcy.aspx

[dingdong]

Here is their contact info.

http://www.prosper.com/about/contact_us.aspx

[xaviationud]

Thank you for all the help!

[dingdong]

You're quite welcome!

[DebtEnder]

will not feed trolls

[xaviationud]

It's a little hard to pay up when I lost my job, thanks for looking me up though.

[lrprn]

will not feed trolls

No worries...the troll you responded about is now banned permanently and the post removed

[xaviationud]

Thank you

[prosperlende]

As a prosperlender, I'm sure you will be quick to eliminate this post also. I just wanted to appeal to any of you who have consciences and remind you that when you cop out on your Prosper loans, you are hurting REAL PEOPLE just like you who also face problems in this economy. Why not at least make some effort to continue paying us instead of kicking us all in the butts?

[xaviationud]

I don't need a guilt trip on top of the stress bankruptcy and having no luck in finding a job.

Moderator please close this topic.

[HHM]

As a prosperlender, I'm sure you will be quick to eliminate this post also. I just wanted to appeal to any of you who have consciences and remind you that when you cop out on your Prosper loans, you are hurting REAL PEOPLE just like you who also face problems in this economy. Why not at least make some effort to continue paying us instead of kicking us all in the butts?

That is ironic, if you are facing problems, why are you lending money at such risk. You are the one that made a BAD INVESTMENT, who's fault is that.

Ok, for those that may not know, Prosper Lending is sort of like a networking site, where Person to Person loans are made. Think of it like PayPal, except instead of buying and selling junk over the Internet, lenders and borrowers are brought together. There is nothing inherently wrong with the idea, but those that lend money should realize that these are high risk investments with default rates in excess of 20%. You can hedge this type of expected loss by making many small loans, but looking at the website, people are getting $7000+ loans which is really too much for this sort of micro-lending. For a lender, these types of loans are a bad investment, even if you charge 12% interest, and assuming you have a large enough basket of loans so that a default on 1 or 2 won't kill you, you barely average 1.5% annual return (because of the high 20%+ default rate). If that is the best you can hope for, go invest in 30 year T-Bills, at least there is very little risk there.

Example. $100,000 to lend
You make 20 $5,000 loans at 12% interest with 36 month terms, and assuming a 20% default rate (for sake of math, we will assume the bad loans defaulted in month 12).
16 loans mature: Gross Revenue: $95,657.28 (profit $15,657.28)
4 loans default in month 12: Gross Revenue $7,971.44
Total GR from $100,000 investment, $103,628.72
Net results, over 3 years you made 3,628.72, an average annual return of 1.21%
And this is actually a rosy scenario. Note, this investment doesn't even beat the rate of inflation, so in a real sense, you LOST money.
If you invested in a 30 year T-Bill at 5%, you would have made $16,147.22 at the end of 3 years and incurred minimal risk. Hell, most money markets and CD's pay better. With the risk you are assuming as a Prosper Lender, you are much better off in the stock market, the downside is still the same (lose 100% of the investment), but at least your upside is unlimited.

What people don't realize, lending money is about risk mitigation because your upside potential is capped, but the down side is you could lose everything. So, for any given $5,000 loan you make, you only stand to make $978.58 (at the above term), but you could lose $5,000. It's not like your borrower is going to pay you double for servicing his loan really well. To hedge this risk, you need to charge high interest rates and make A LOT of loans, as much as we hate the default rates charged by CC companies, this is why it is done. The problem with many Prosper lenders, they do not account for this and looking at the average interest rates charged, it is generally a poor investment.

Bottom line, if you are not ready to be in the "Business of lending", (i.e. accepting that there will be defaults), get out. From a BK perspective, these loans are general unsecured debt, except that the debtor may not know who is the actual lender.

If you go to the Prosper website, looks like they have been temporarily shut down. It appears they got an Unfavorable ruling from the SEC requiring them to register and comply because they sell essentially sell securities.

[ira01]

That is ironic, if you are facing problems, why are you lending money at such risk. You are the one that made a BAD INVESTMENT, who's fault is that.

Many Prosper lenders lent their money two or more years ago. This is pertinent to your two questions for at least two reasons. First, their own financial situations may have been quite different then than now (just like the borrowers' situations may have changed for the worse). The difference is that the borrowers promised to repay their loans, and a shockingly large number have not.

Second, and more importantly, Prosper greatly misrepresented the risk to lenders, using a variety of techniques. For years, Prosper provided lenders with "Experian default rates" which it purported represented the likelihood that borrowers of a certain credit grade would default, based on the historical performance of millions of borrowers in Experian's files. Prosper further advised lenders to add their desired rate of return to the Experian default rate applicable to a particular loan to determine what interest rate to bid at. As I recall, these Experian default rates ranged from about 0.1% for AA borrowers, to about 8% for a D borrower like the OP in this thread, to about 12% for HR borrowers. Thus, lenders loaning to the OP at 21% (the rate on his loan) would have expected to receive a healthy return on their investment according to the information provided by prosper and Experian.

Unfortunately, it turned out that these Experian default rates were total crap -- about 25% of all Prosper loans have already gone into the crapper, and graphs of historical Prosper loan performance show that around 40% of all Prosper loans will wind up in the crapper before the three-year loan term comes.

Nor were the bogus Experian default rates the only means by which Prosper tricked lenders. For a very long time Prosper calculated its default rate in a highly misleading fashion (making at least two fundamental errors), and loudly trumpeted this bogus great performance throughout the media as much as it could. At a time when it was clear that Prosper's "real" default rate would approach at least 20%, Chris Larsen, Prosper's CEO and co-founder, was widely proclaiming to the media that Prosper's default rate was 2.7%. So a lot of new lenders read these bogus numbers in Money Magazine, Newsweek, and other mainstream publications and believed them.

In addition to the problems with Prosper itself, far too many borrowers (aided by Prosper's dismal performance verifying borrowers' information and pursuing fraud) ripped off Prosper lenders by taking loans with no intention of repaying them, or misrepresented themselves and/or their financial condition in their loan listings. For example, I have $50 on a $24,000 loan to a borrower who appeared to be great -- B rated credit, low debt-to-income ratio, 0 delinquencies, good income, etc. That borrower never made a SINGLE payment. Do you think he ever had any intention of making payments? Of course not. Did Prosper pursue this borrower for his fraud? No.

So in response to your (perfectly valid) question "whose fault is that" for making a bad investment -- the answer is that there is plenty of blame to go around. Some lenders were absolutely too willing to fund loans that were obviously crap based on the listing, and to bid the rates down too low to boot. But Prosper deserves a much greater portion of the blame for misleading lenders and for doing such a poor job verifying listings and pursuing collections and legal actions against fraudsters. And ultimately, borrowers are the ones responsible for promising to repay their loans, inducing lenders to believe their hard-luck stories, and then stiffing us in appalling numbers.

For anyone interested in learning more about Prosper, I recommend visiting their website [link removed by moderator - google it if you want to visit] the largest independent forum about Prosper.

[HHM]

That is good insight. Thank you.

You are correct, if loans are misrepresented that is one thing, but you didn't see some of the previous posts in this thread (that have been deleted) chastising the OP for BK'ing on a Prosper Loan.