Bad debt repayment higher than interest earned.

That's as expected.  You can only sell good loans, so the residual ones will have a lot of defaults etc.

I needed to sell off some loans for a deposit earlier, so I have the same issue in my old Core fund.  Whereas the new equivalent ISA fund is doing OK.  My Plus fund (I haven't sold any of those) seems to be headed downwards too, but its only a small fraction of what I have currently invested so doesn't bother me.

I always find it hard to believe when Zopa tells me my "projected return" from Zopa plus is now 9.8% while I have 29 defaults and 3 collections in the plus, this 9.8% return is a lot closer to the 11% return told by the Zopa agent before I "invested" the plus in 2017.

I have not put new money into ZOPA for years now but I get a steady stream of bad debt repayments of £22 or so a month (and long may it continue!)
Overall, my bad debts on ZOPA of total funds lent out peaked at 10% (gulp!) to be steadily reduced to less than 3% now.  I pretty much stopped investing in ZOPA at the 10% peak, so few new loans were made after that point.

I'm guessing that with that much returned on defaults monthly it was somewhat of a very large portfolio in its day. I'm lucky if I get 2p in a month, last year returned about £10 in total. 

My old Pre-Safeguard defaults are about 50% cleared but they are very slow too. I'm not that encouraged by Zopa collection rates on defaults.

To be fair though I long since wrote off the defaults and even as they come in thick and fast at the moment as my portfolio has grown considerably since IFISA in Zopa with newlend. I am expecting quite a few defaults to start appearing along the way as the investments settle down and thankfully for me at the moment defaults are running at about 23% of monthly returns. Now that my money is all lent out I am expecting that to settle down in relend mode over the next 18+ months or so. 

Mind you I have no real knowledge here and am just happy that at the moment I seem to have investment weightings working for me rather than against me. Just to be clear though I am not looking for the 10% stuff never have I am looking for 4-5% year on year and despite the defaults coming in I am still achieving that so far.

Yes, You'll still be getting that.

I'd be cautious about the 'plus' market (high risk) but the mainstream one seems fine.   The ISA wrapper is good if you haven't already used up your allowance elsewhere.

Oh that's about as much as I have committed of late, I assumed it would be more than that with the amount you are getting returned. Mind you having said that both myself and Mrs Aju have picked up a lot of defaults that have paid nothing in this recent batch as far as I can tell. So it remains to be seen how this may pan out.

One of the reasons we started more lending was that we had lost most of our current account interest on many accounts when Tesco's changed their rules and we lost a very convenient place to get DD cover for the current accounts terms and conditions. That lost interest was quite a bit below that we were getting in Zopa so we had a plan to build up ISA stocks with the lost current account money. It was a bit of a blow losing the Zopa SG cover in December especially as we had large sums in that part and could then see the defaults rates in there so it was a concern but as long as we beat inflation with a bit on the top for us then that means our money is not suffering any Inflation Tax that it would be without any interest coming in.

The one thing I have done with the way we have lent out recently is to make sure that we only lend in £10 blocks as much as possible - in the old SG it was less of an issue if a £50 loan defaulted as it was covered - the way to do that is to never lend in blocks more than £1999. With the sums of money we have lent out recently it is difficult to see the defaults taking on average of 20-25% of returns each month - at least for the last 4 months anyway - that said overall my default rate is still way less than 1% so far. 

Another thing that has kept things level I feel is only limiting to 20% of total invested in Plus, it means lower rates but may be less damaging although that's not been proven for me anyway 

 

It took me over a month to lend out just over 17k, I had a few mishaps and had to withdraw lending but in essence I found the best way was to lend the initial £1999 and then daily watch it and lend to topup. I turned off relending after the mishaps and kept a track of the new lend using the summary page. The reason I turned off the relend was the mishaps with going over the £1999. I think I picked up about 5 £20 ones before I noticed it and withdrew back to holding. It was intense though as at the start I was increasing the lending sometimes 3/4 times a day until I realised it was probably better to lend new money once a day.

It worked though, although it still remains to be seen if it's a good strategy. One thing I do know though is that my recent defaults levels, mostly < £10 blocks are increased on a per loan basis but if they were £50 ones it might look a bit more alarming. Unless of course all the loans were £50 that is with commensurate levels of interest payments too. My diversification level with the £10 loans is running at about .5% the last time I checked (I must check again after this last lending spree)