What happens when a borrower does not pay back his loan?

At BTCJam, we strive to deliver the best possible returns with the lowest risk to our investors. We have many protocols to ensure that we feature high quality borrowers while we actively try to filter out scams and bad borrowers.

The first thing we do is to collect various points of identification: ebay, paypal accounts, banking statements, social network information, etc about the borrowers. We verify all those documents and accounts through our experienced team.
Second, we assess the borrower based on his information with our credit scoring algorithm. We assign every borrower a score ranging from A+ to E-, depending on the likelihood that they payback investors.
Finally, the “wisdom of the crowds,” –our dear investors, decide who gets funded. As you may know, an individual is usually not very good at making an estimate, but when you average out the esitmates of a large group of people the outcome is more accurate.  Of course, having multiple investors involved is no guarantee that a borrower will repay, but it is less likely that a large group of people will be fooled by someone compared to just one person. We suggest that investors pay more attention to loans that are funded by multiple people. The returns may be lower, but they are more safe.

On a separate note, make sure that you diversify you investments as much as possible. Learn more about this here:

What happens, if despite of all this, someone still does not pay me back?

If a borrower misses one of his payments for the first time, we try to get in contact with him via email or phone. If we get a hold of them and they manage to pay back with a slight delay, we will accept the late payment with a processing fee and return the money immediately.

If a borrower does not respond to us within 90 days, we start an arbitration process.

What is International Arbitration?

Arbitrators are neutral third-parties to whom the parties yield the power to decide the dispute and render an arbitration award similar to a court judgment while avoiding the cost and delays common in court litigation. Arbitration is a faster, more efficient legal alternative than bringing someone to court. It is interesting to note that arbitration was the only means of resolving disputes for thousands of years before there were courts. Courts actually embrace arbitration to resolve civil disputes since it reduces the size of court dockets. Arbitration is binding (cannot be appealed) and is recognized and enforced in nearly 150 countries under The United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958). For example, if a Canadian borrower fails to pay back their loan, then a Canadian arbitration company contacts the individual to collect the loan. The arbitration companies we use are similar and often overlap with those used by large corporate banks.

What are the benefits of International Arbitration?

  • Safer investments
  • Debt renegotiation
  • Enforcement

Which loans are susceptible to arbitration?

All loans made after 03/30/2013.

When is a loan sent to arbitration?

When it is overdue for more than 90 days.

Do I need to submit the loan to arbitration myself?

No, the loans are sent to arbitration automatically. The borrower and all the investors will be notified if it happens.

What is the process of getting a loan on BTCJam?

Getting a loan on BTCJam is a very straight forward process.

Here is how it works:

1. Verify your identity

Verifying your identity is the initial step in applying for a loan at BTCJam. We will ask for your photo ID, address verification, income verification, banking conformation, social network ids, personal references, your Paypal account, and your Ebay account.  The more complete your profile is, the more trust you gain in BTCJam and, thus, the more likely your loan will be funded.

Make sure to use high quality photos/scans, so that our verification team can easily read all the important information from your passport, your income stubs etc.

Do I need to have all of these social networking accounts?

You don’t need all of the items listed above. HOWEVER, our credit score algorithm will likely give you a low rating if you have only a few items verified. The minimum verification we require is your identity and address, but beware, your interest and APR will be extremely high. The more legitimate and trustworthy you appear, the more likely you will get funded on good terms.

How long does the verification process take?

1-2 business days after you have submitted your documents.

2. Describe your loan and decide the terms

Go through our easy loan creation process. Here you can describe why you need the loan and how you will repay it. You can also set the terms: length of the loan, interest rate you want to pay, and frequency of payments.

After that, all you have to do is to hit Publish and you’re all set!

3. Watch investors fund your loan and get the money!

This is the fun part. Watch as investors come in to fund your loan. Of course it helps to tell friends and family about this, as they can increase the speed at which your loan gets funded and it increases social verification for investors.

As soon as the listing has been funded by at least 70%, you can activate the listing! This binds you to the terms you defined in the loan listing in step two.

The best part: The bitcoins are instantly available in your account.

So are you ready to get a loan? Click here to get started!

How BTCJam handles Transaction Malleability

The recent statement by Mt. Gox claiming that transaction malleability needed to be fixed before Mt. Gox could resume bitcoin withdrawals has left many wondering whether there is a fatal technical flaw with Bitcoin.  Gavin Andersen and many others were quick to point out that this has been known about since 2011, is not an issue, and that there are ways to easily address this for exchanges and wallets.

At BTCJam, we have put a lot of thought into how we handle security. We have been highly conscious about security from the day BTCJam was first started. The way we implement transaction verifications makes us absolutely secure against an attack similar to Mt. Gox.

For the technically inclined, we store the set of addresses, timestamp and amount. Unlike the Transaction ID this can not be changed or duplicated by third parties.

We have a very experienced team who handles millions of credit card transactions per day. For us, security is absolutely paramount. We will keep a vigilant eye on security and make sure our customers can enjoy all the benefits of bitcoin without having to worry about investing or storing their coins with us.

Don’t have an account yet? Sign up with BTCJam–the first and largest P2P Lending Platform!