Good project, but too many risk.
If about a loan, there are always people who do not pay off their debts
How do you solve it ??
Hi Kidbounty, thanks for asking this question. It's an important one, and one we believe we have solved. Fintrux tackles this specific issue on multiple fronts:
1. Prior to the loana) We verify the identity of all members by comparing supplied names, social security numbers,
addresses and telephone numbers against the names, social security numbers, addresses and telephone
numbers in the records of a consumer reporting agency, as well as other databases. Of course, this
information is not provided directly to the investor, but under a screen name.
The most important credit check we provide is a 'FICO' score. A FICO score is a numeric rating that ranges
between 300 and 850 that rates a person’s credit risk based
on past credit history and current credit situation. FICO scoring was developed by Fair Isaac Corporation.
FICO scores reflect a mathematical formula that is based on information in a consumer’s credit report,
compared to information on other consumers. Consumers with higher scores typically represent a lower
risk of defaulting on their loans. A borrower with a FICO score of 670+, our minimum credit score for
Standard Program Loans, is considered by credit providers to be a “prime” borrower.
b) We also have an option for the borrow to be associated with a guarantor and their bank accounts
will be withdrawn automatically to cover the delinquency.
Thus, along with our other borrower requirements (see our
whitepaper section 2.5.1),
we calculate the risk for an investor to loan to this particular client.
In the end, the decision is completely up to the investor.2. During the loanAfter a 15-day grace period, the investor may, in his/her discretion, assesses a late payment fee. The
amount of the late payment fee is the greater of 5.00% of the unpaid payment amount or the equivalent
of USD$10.00, or such lesser amount as may be provided by applicable law. This fee may be charged
only once per late payment.
Investor may choose not to assess a late payment fee when a borrower promises to return a delinquent
Financing to current status and fulfills that promise. Investor may also work with a borrower member to
structure a new payment plan (refinance) in respect of the Financing with the consent of other investors
related to that Financing.
If a loan becomes overdue, investor may either refer the loan to an outside collection agent or to our inhouse
collections department. We generally use our in-house collections department as a first step
when a borrower member misses a payment. In the event that our initial in-house attempts to contact a
borrower member are unsuccessful, we generally refer the delinquent account to the outside collection
agent. Amounts equal to any recoveries we receive from the collection process are payable to investors
on a pro rata basis, subject to our deduction of our 1.00% service charge, if applicable, and an additional
collection fee. The investor is only charged the additional collection fee if the collection agency or we
are able to collect a payment.
Our collection process changes in the event of a borrower bankruptcy filing. When we receive notice of
the bankruptcy filing, as required by law, we cease all collection actions on the loan. The status of the
loan, which the relevant investors may view, switches to bankruptcy. We next determine what we
believe to be an appropriate approach to dealing with the borrower’s bankruptcy. If the proceeding
seeks liquidation, we attempt to determine if the proceeding is a “no asset” proceeding, based on
instructions we receive from the bankruptcy court. If the proceeding is a “no asset” proceeding, we take
no further action and assume that no recovery will be made on the Financing.
We file a proof of claim involving the borrower when permitted. The decision to pursue additional relief
beyond the proof of claim in any specific matter involving a borrower will be entirely within our
discretion and will depend upon certain factors including:
• if the borrower used the proceeds of a loan in a way other than that which was described in the
borrower’s application;
• if the bankruptcy is a Chapter 13 proceeding, whether the proceeding was filed in good faith and if
the proposed plan reflects a “best effort” on the borrower’s behalf; and our view of the costs and
benefits to us of any proposed action.
3. After the loanTo further enhance our offering, we will be integrating insurance policies into our platform. Investors (lenders)
will have the option to pay a small premium representing a percentage of the interest earned into an insurance pool.
If the loan holder defaults on their payment, the premium can be repaid from the insurance.
We are building a very strong team of lawyers and industry players that are well established in the financing industry.
We are very confident we can handle most, if not all situations because we simply have done it before. The only
difference now is that with the advent of new technology (
Ethereum and
no-code technology)
we can further automate administrative tasks to entirely cut out the middlemen and save everybody money and time.
Please let me know if this answers your query and I am happy to clarify any further questions you may have!
Feel free to take a look at our whitepaper to learn more.
