Recovery & Collection Policy
Effective on: March 20, 2018
liwwa has a fiduciary responsibility to ensure that investors receive payments due to them in full, and in a timely manner. Investor returns are calculated in real time and late payments impact portfolio returns (click here for more information).
Late Payment Collection Process
If a payment is not made on its due date, liwwa’s internal collections team will contact the borrower through multiple communication channels. The internal collections team will work with the borrower to bring the payment back on track. If internal collection efforts do not yield results, liwwa will transfer the case to a specialized legal firm, which will be responsible for conducting legal action.
Loan Status Definitions
We use the following industry-standard definitions to classify a loan’s status.
Current: Loans that are "Current" are 0-30 days late relative to their original payment schedules.
Loans that have been restructured can become "Current" after making 3 consecutive payments of their restructured schedule.
For example, suppose a loan has a payment due on March 1st, 2018. If this payment is received before April 1st, the loan will be considered Current. If, however, the payment has not been received for 30 days, it will be marked as "Delinquent (30 days) as explained below.
Delinquent (30 days): Loans marked as "Delinquent (30 days)" indicate that the borrower is between 31 and 60 days late relative to the original payment schedule.
Delinquent (60 days): Loans marked as "Delinquent (60 days)" indicate that the borrower is between 61 and 90 days late relative to the original payment schedule.
Delinquent (90 days): Loans marked as "Delinquent (90 days)" indicate that the borrower is between 91 and 120 days late relative to the original payment schedule.
Delinquent (120 days): Loans marked as "Delinquent (120 days)" indicate that the borrower is between 121 and 180 days relative to the original payment schedule.
Delinquent (180 days): Loans marked as "Delinquent (180 days)" indicate that the borrower is more than 180 days late relative to the original payment schedule.
Written Off: Loans are "Written Off" when their recovery prospects become very low. Typically, these will be loans that are significantly delinquent, and for which liwwa's collection process is not yielding positive recovery outcomes. Loans are written off by a decision of liwwa's Collections Committee (see Write-Offs below).
Loans marked as "Written Off" indicate that the loan is likely to be charged-off without recovering the remaining outstanding balance. This status is determined by liwwa’s Collections Committee based on our Write-Off policy, irrelevant of how long the loan has been marked as delinquent. In some cases, loans marked as "Written Off" can still be recovered.
Repaid: Loans marked as "Repaid" indicate that the borrower has covered all outstanding dues. Some loans marked as "Repaid" may be subject to lawyers’ success fees, which means that the actual amount received by the investor will be less than the initial expected amount (see Legal Action below).
If internal collection efforts do not yield results, liwwa transfers the case to a specialized legal firm for legal action. All legal fees will be passed on to the borrower where possible. Furthermore, liwwa covers the outstanding costs of retaining a lawyer and applicable court fees. However, legal firms typically charge 7.50% - 10.00% of collected payments as success fees. Therefore, loans recovered through legal action are remitted to investors net of success fees.
In certain rare cases, where the borrower has demonstrated significant business interruptions, the Collections Committee may agree to restructure a loan based on a new payment schedule. Loans that have been restructured after missing three or more payments can return to "Current" status after making 3 consecutive on-time payments of their restructured schedule. While loans are typically restructured after the borrower has missed three or more payments, loans can also be restructured without three payments being late. In this case, the loan will remain in the "Current" status after restructuring, as long as the borrower continues to pay on-time according to the new schedule.
Loans that had any payment scheduled during the COVID-19 pandemic, (2020-03-01 to 2021-06-30) will also be moved to "Current" status after restructuring, as long as the borrower continues to pay on-time according to the new schedule.
liwwa seeks to offer flexibility to borrowers, particularly where doing so will increase the likelihood of collection and thus safeguard your investment. For this reason, liwwa provides an incentive in the form of a discount for borrowers to repay their loans early. This incentive is designed to ensure that liwwa investors earn roughly the same IRR when a borrower pays early as they would have if the loan had been paid according to its payment schedule. The discount will appear as an Early Repayment Discount on the last payment of the loan.
liwwa's Collections Committee conducts write offs on a quarterly basis. A write-off is a conservative measure, taken only when a loan is showing no progress in its recovery prospects. In all cases, no loan may be written off unless a full effort has been made to recover its balance as per the company's Collection Process and Policy. Even after a write-off, liwwa continues to pursue relevant legal and collections action to recover the loan's balance.