If the borrower is more than 15 days late on a borrower loan, the borrower will be charged a late fee. The late fee is divided up pro-rata among the investors in the corresponding notes, subject to deductions for collection fees and servicing fees. If the borrower loan is more than one day past due, we may collect on it directly or we may refer it to a third party servicer or to a collection agency. Borrower loans that become more than 120 days overdue will be charged-off. Charge-offs are eligible for sale to a debt buyer. A borrower whose loan has charged-off will never be able to borrow again from Prosper, and since we report delinquencies to credit reporting agencies, the charge-off will adversely affect their credit report.
Under no circumstances should you attempt collection on a late payment yourself. You should not contact delinquent borrowers directly. Prosper has a detailed delinquency schedule for borrowers, and any additional contact you have with a borrower may expose you to civil or criminal penalties for unlicensed debt collection. Prosper suspends investors who engage in this sort of activity.