Much to my chagrin, I have managed to pick a Lending Club loan that is now 121+ days late.  I thought it a good time to go over how Lending Club handles these situations…  They take a different approach and it seems a much more clear cut approach from my account’s perspective.

Here is the page where Lending Club details there approach: http://www.lendingclub.com/info/collection-agencies.action.  Here is the relevant portion:

If a payment can not be collected for 3 months after the loan was sent to the collection agencies (that is, 120 days past due), the loan will be removed from the lenders’ portfolios as a total loss (a charge-off). Lending Club will continue to collect on the charged-off loans until the loans are finally packaged and sold to a debt purchaser, which may take another six to nine months. Any recovery of the loan will be credited to the lenders’ accounts as extraordinary income.

The key points:

• The loan is immediately defaulted as a total loss.  (Total loss is good from a tax perspective.)
• Any future collections or debt sale will be credited back as extraordinary income.
• Lending Club will work the loan as it see fit and gives no definite time frame on a sale: “may take 6 to 9 months”

This is a clean approach from my perspective (trying to keep an accurate representation of the account in Quicken.) 

I also now have a total of 4 loans from Lending Club that are in some form of late and I continue to move money out on a semi-regular basis until such time as Lending Club reopens to lenders.  Here is my current account screen.

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Collections, Lending Club