In general, in the event that a borrower does not make a payment according to schedule, the lending company will contact the borrower to remind them about the missed payment. If the payment is still not made, the lending company may pursue different options, depending on the situation leading to the missed payment. When feasible, the loan is rescheduled or otherwise modified. As a last resort, in the event that the borrower is not able or willing to make the payment, the lending company will start loan recovery procedures. The recovery process may be pursued by either the lending company or an outsourced debt collector. The exact debt recovery process and timeframe is different for each lending company.
You can reduce the potential loss in the case of a borrower default by investing in opportunities with a buyback obligation. If the borrower has failed to pay more than 60 days after the scheduled repayment date, the buyback obligation kicks in and the lending company is obligated to buy back the loan, together with any interest. Please note that buyback obligation does not reduce the potential loss in the case of a lending company defaulting on its obligations.