Can anyone make any sense of when LC moves a note from Late to Default, and then from Default to Charge off? Also, why is it that some loans stay out of default or charge off status even when the borrower filed for bankruptcy, in some cases months ago?
Confused....
Also, AFAIK, you can't charge off an account unless it's 180 days delinquent. In some cases you may have a payment that brings the account one delinquency cycle up, so the 6 months are not necessarily 6 calendar months after it hit Late 16-30. On top of that, normally the charge off procedure runs only once a month, at the end of the accounting cycle.
In case of BKs, depending on the chapter and the type of debt, you may be able to charge off the account as soon as the court discharges the obligor.
It's an automated process, one that doesn't always make a lot of sense. I believe they just compare where the loan is with where the loan should be without paying any attention to what's actually going on with the loan.
For example, I had a loan where the borrower stopped making payments for 6 1/2 months. It went into Default.
But then the borrower started making regular payments again.
So this loan would flip from Default to Late when a payment came in and then 2 weeks later it would flip back into Default, because of course they were "more than 6 months behind" again.
This went on for months. (It gets extra confusing because when a loan is in Default, the interest stops accruing.)
And you can forget about the "Last Payment" field on the Loan Performance page. If a borrower missed a payment 2 years ago but has made every payment since it will claim the borrower hasn't made a payment in 2 years! e.g.
https://www.lendingclub.com/account/loanPerf.action?loan_id=624713&order_id=2202536¬e_id=3118416