How does the Zopa Safeguard work?
In the rare event that a borrower gets into financial difficulty and can’t keep up with their repayments, their agreement to pay you in monthly instalments stops. This is called ‘defaulting’ on their loan. When this happens they owe you the remainder of the money you lent them, plus any interest due on it up to that point in time.
At this point P2PS (the Trustee) would take ownership of the loan from you, and in return give you the money you are owed: this comes from the Zopa Safeguard. You are then able to lend it out again or withdraw it to your personal bank account. Meaning you can lend knowing your money is safe at Zopa.