Collection News

Debt Purchasing Takes Center Stage at ACA International Fall Forum

2009-11-06T08:13:41-07:00

The debt buying and selling industry has undergone significant changes in the last year as a result of the economy, credit crunch and the regulatory landscape, all of which were touched upon Thursday at ACA International’s Fall Forum in Chicago.

Today’s asset purchase and recovery management business is quite different than it was when we entered it, noted Steve Leckerman, executive vice president and chief operating officer of NCO Financial Systems, Inc.

Only 20 years ago, the average primary fees were in the low 30 percent range; the secondary fees consistently were 50 percent. Recovery percentages were in the mid-to upper 30 percent range and the secondary recoveries averaged about 6 percent, according to Leckerman.

“Average balances at placement were around $400 and insurance recovery could make up more than 60 percent of the dollars collected for clients in primary collections,” Leckerman said.

The industry itself had less focus on compliance; more volume, higher commissions and higher liquidations. More clients were selling and more agencies were in the network receiving business. Money was available for the consumer to borrow.

Debt buying was a robust segment of the business with willing buyers and willing sellers. Both large and small debt buyers did well.

Between 2005 and 2007, the collection industry was flat even though consumer debt and delinquencies had grown to unprecedented levels.

“There’s a perfect storm going on right now,” Leckerman said, pointing to the debt, delinquencies, recession, reduced credit availability, low consumer confidence and the complex regulatory environment.

“If you do business with large banks, utility companies or other large firms, they are looking to cut costs; health care is fearful of rules changing,” Leckerman said. “You’re working with more middle-class debtors. They’re more sophisticated consumers, so they will file more complaints. We have attorney creditors who are like regular customers.”

Competition is fierce in this type of environment, Leckerman said. “In today’s environment, an agency needs to deliver consistent best performance. Second is not good enough. You have to be able to adapt to clients’ ever increasing demand for data. They want performance metrics down to metrics for the employees.”

Leckerman also encouraged the audience to protect their clients’ brands and to seek to be an industry leader.

To succeed in the industry today, Leckerman said, a firm needs to have a winning attitude; accountability at every level; the right strategy; flawless execution, even on “the small stuff;” face time with regulations and have a self-regulation initiative.



Valuation and Divesting

Among the common threads of many of the deals so far this year, according to Brian Greenberg, managing director of Greenberg Advisors, LLC, is that more distressed companies are seeking liquidity and debt buyers are seeking debt/equity funding partners.

Greenberg added that investors are seeking portfolios offering growth of at least 15 percent annually and similar performance in terms of profit margins. But the investors won’t take the buyers word for past performance, investors want substantive proof.

Investors are also interested in business partners that offer a niche focus or some type of differentiation from other potential acquisitions. An excellent, tenured management team, efficient technology, good analytics and “sticky” clients are other attributes investors are seeking.

“Due diligence is more intensive today,” added Robert Castle, managing director, investment banking, for Northland Securities, Inc. “Check with your advisors [before a transaction]. There is no such thing as being over-prepared.”

As compliance and regulation continue to become bigger factors and consume more of a firm’s resources, it will become increasingly difficult for small and mid-sized companies to compete, Greenberg and Castle added. One factor that could affect the timing of some deals in the next five quarters is the change in capital gains taxes, which they expect will take effect after 2010.

Debt Buyer Licensing

Companies making acquisitions should closely examine state laws, particularly if a transaction brings them into new locations, advised Valerie Hayes, ACA International vice president for legal compliance and government affairs.

Each state has its own rules for the licensure of debt purchasers (there are a couple without specific rules), Hayes said. Among these rules is the actual definition of a debt purchaser.

“Some states differentiate between active and passive debt purchasers,” Hayes added. “You need to be aware of the guidance provided by state regulators in interpreting licensing statutes.”

For example, in Connecticut, state law prohibits “consumer collection agencies from purchasing or receiving assignments of claims for the purpose of collection or to institute suit.”

Loss Prevention Techniques

One of the biggest factors in avoiding unexpected losses in debt purchase transactions is to use carefully drafted contracts, said Hayes and Janis St. Martin, administrative vice president for the Collector’s Insurance Agency, Inc., a subsidiary of ACA International.

In reviewing these contracts, firms should seek legal assistance and conduct thorough due diligence, Hayes and St. Martin advised, recommending that thorough due diligence firms review contracts executed by others.

They also recommended that debt buyers and sellers pay particular attention to the hold-harmless clause and the liability assumed or transferred in the contract. Debt owners are routinely named in lawsuits against collection agencies.

Collectors Insurance Agency offers liability insurance for contractual liability. Errors and omissions insurance can also mitigate some of the risk in debt transactions.

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Lowell Group Tops Charts in OC&C Credit Management and Debt Collection Index

2009-11-06T08:13:41-07:00

Leeds-based debt buyer Lowell Group has come top of the charts for the second year running in the OC&C Credit Management and Debt Collection Index.

Lowell scored 63 points in the 2009 index, three less than last year, just beating hybrid Capquest, which rose from eighth to second with 62 points. The annual index, compiled by strategy consultancy OC&C and published exclusively in Credit Today, uses quantitative and qualitative measures to rank credit management and debt collection companies in the UK and Europe.

This year the index reflected a turbulent year in the industry, with dramatic alterations in many of the scores compared with 2008. However, one of the report’s author’s – OC&C managing partner David Hosein – said the credit crunch was no excuse for poor performance. “The writing was on the wall for people who had not improved their businesses before,” he said.

Last year OC&C predicted that Lowell’s clear strategy of focusing on low balance UK debts would be an advantage in a downturn and it has enjoyed “stellar growth and financial performance” since. The low balance focus means it has been less susceptible to declines in settlements and its arrangements are also holding up. This year it has also acquired trace business J2, allowing it to hold onto another strategic advantage.

Capquest, meanwhile, is the index’s rising star. Operationally excellent, it has mastered onshore and offshore capabilities with a South African call centre, and has a strong management team. It covers all elements of the loan lifecycle and has entered the mortgage collections market as well as being an early adopter of compliance and security standards. Its challenge is now to manage its diversity, said OC&C.

The Lewis Group, another debt buyer, came third in the index from thirteenth last year – praised for its range of techniques and size as well as top line growth. Parent company Cattles may have struggled but this means it is less likely to be dependent on the parent, said OC&C.

Following Cattles, Lindorff scored 49 points and moved up the index one place to fourth. The European giant’s strategy “goes beyond hybrid” said OC&C, with scale, size and a good management team. Operationally successful in many countries, it is a rarity in the purchase market. In fifth place is Cabot Financial, dropping from 61 points and fourth place to 49 points in 2009. OC&C said the size and scale of the debt purchaser has kept it in the top five but believes it to be on a downward trajectory and facing numerous challenges.

Also praised by the index authors as “rock steady ships” are debt collection agency BCW Group, bailiffs Equita and debt solutions provider Invocas. However, debt buyers 1st Credit and Aktiv Kapital suffered, plummeting from joint second positions last year. For the full index visit http://www.credittoday.co.uk/filestore/homePDF/CT_Oct09_occ2.pdf

The index is not intended to be used as an investment guide or as a way of identifying businesses that will fail.

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ACA International Board Halts Plans for Self Regulation in Collection Industry

2009-11-05T03:00:57-07:00

ACA International’s Board of Directors moved quickly Wednesday to halt proposed legislation that sought to create a self-regulation structure for the debt collection and purchasing industry after complaints from some of the board members.

The plan would have included federal mandates for state licensing and registration for agencies and collectors, and called for an industry education program run by ACA International.

Some board members told insideARM that ACA’s executive committee submitted the proposal in late September to Rep. Barney Frank (D-Mass.), chairman of the House Financial Services Committee, as an amendment to legislation that would create the Consumer Financial Protection Agency (CFPA). Sources said Frank could have introduced the proposal within two weeks.

In July, ACA board members gave its executive committee the power to study and, if feasible, draw up a plan for a self-regulatory structure, complete with a nationwide debt collector registry and dispute resolution program.

But during a special meeting Wednesday of the board at ACA’s annual Fall Forum Conference in Chicago, directors voted to take away that authority. The board also directed the executive committee to withdraw, in writing and within 24 hours of the meeting’s end, its amendment proposal, and confirm to all board members the proposal’s withdrawal to Rep. Frank and other political bodies by Friday.

ACA National Board of Director member Jerry Greenblatt told insideARM he was “very happy” with the outcome of the vote. “What’s happened with the passage of this motion is that the decision making within ACA is slowly being given back to ACA members.” He added that the vote to withdraw the proposal “is a great victory for the members of the association, especially the small and mid-size agencies.”

ACA spokesman John Nemo told insideARM that the association will continue to study the issue while incorporating and addressing the concerns of the membership.

“We are a member driven organization. We listen to our membership,” Nemo said. “There was no intent to try to deceive anyone or do anything behind the scenes. We understand that this is an incredibly sensitive and important issue, perhaps the biggest one since the Fair Debt Collection Practices Act (FDCPA) passed, and we want to make sure we do as good a job as possible of being transparent about the process and making sure our board of directors and our membership at large are informed and able to give their input.”

ACA’s actions regarding a self regulation program raised questions within its membership and in the broader accounts receivable management industry.

Emil Hartleb, executive director of Commercial Collection Agency Association, told insideARM that ACA’s approach to self regulation was “fraught with danger for the industry.”

“Anytime you look at licensing or registration, there are unintended consequences that will come out. We don’t need more licensing. What we need is hard enforcement against rogue agencies who are committing these atrocities,” Hartleb said.

David Goch, legislative counsel for the Commercial Law League of America told inside ARM he was “surprised” to learn about a proposal by ACA to apparently legislatively create a debt collection industry licensing body.

Lloyd Dix, vice president and general counsel of Union Adjustment Co. in Burbank, Calif., said ACA’s amendment proposal has some California Association of Collectors (CAC) members considering renewing its motion to amend its bylaws requiring CAC members to also be ACA members (“California Association of Collectors Votes to Stand Pat on ACA Membership Ties,” Sept. 25). Dix is also the chairman of the Legislative Council for the CAC.

Days before the meeting and vote, Rubin attempted to explain the executive committee’s action in a letter to the ACA Board of Directors.

In her letter, Rubin said ACA submitted the proposal, modeled after the SAFE Act for the mortgage brokerage industry, after a failed attempt to get Rep. Frank to include an exemption of the debt collection and asset purchase industry from CFPA oversight in legislation to create the new regulatory agency.

“He indicated there would be no carve out for the collection and asset purchasing industry and he would consider introducing the SAFE Act amendments for the collection and asset purchasing industry as a floor amendment,” Rubin wrote of ACA’s meeting with Frank.

Critics of the proposal, however, said it would drastically change the debt collection industry and was potentially more damaging than governance by the CFPA because on the surface, the proposal appears to require collectors and asset purchasers to obtain a license in each state they conduct business.

Some key elements of ACA’s proposal included a call for:

All agencies and asset purchases to be licensed and registered by their state or by the CFPA if no state licensing and registration program exists one year of the legislation is passed.
ACA International to be the sole provider of all training materials associated with 20 hours of mandated initial education required to be licensed, under the scheme the amendment proposes and 8 hours of education necessary for annual renewals
Every collection agency must be licensed by the state as a debt collector before engaging in the collection of debt
Every individual debt collector must work for a state-licensed debt collector and must be individually registered by the state as a debt collector within 90-days of employment
The proposal also called for each collector to be subject to criminal background checks, finger printings by the Federal Bureau of Investigations and criminal background checks
Establishment of national licensing for states which do not adopt their own state licensing programs, with no preemption of state laws, thus adding an additional level of bureaucracy.

Greenblatt, who is also President-elect of the CAC, called the proposal “a monumental detriment to small and mid-sized debt collection agencies because of the additional costs and burden, and the monopoly that ACA attempted to mandate through federal legislation on education.”

Dix said the resolution program proposed also did not preempt any state or federal legal actions or bar any judicial remedies. “It was quite a blow when we saw it,” Dix said. “We had no idea it was coming.”

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Collector's For Change Drawing in October 2009

2009-11-05T09:11:23-07:00

Ottawa, Kansas: The Franklin County Cancer Foundation is first monthly recipient of National Recovery Services (NRS) Collector’s for Change drawing. The drawing took place on October 30th and the funds were delivered in person by Brad DeKraai, CEO/president of NRS, and Nydia Chan, the monthly drawing winner, on November 2, 2009. The Franklin County Cancer Foundation was pleasantly surprised to be presented with a check for $1264; of which $632 came directly from NRS employee contributions.

Nydia Chan chose The Franklin County Cancer Foundation because she has experienced the loss of loved ones through cancer. Chan stated that; “I have lost both of my grandmothers to cancer and I know that they (Then Franklin County Cancer Foundation) will use the funds to help people here in Ottawa.”

There is no doubt that the collector’s at NRS feel empowered by the Collectors for Change Project. Employees donate their loose change to benefit various charities and NRS matches the monthly total: dollar for dollar. Every month each collector selects a charity close to their heart and each month a drawing is held to determine which charity will receive all of the funds. It is possible to make a positive and sustainable impact throughout both the collection industry and the local community.

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DANTOM Systems and Diversified Data Announce Strategic Alliance

2009-11-05T08:35:07-07:00

Wixom, Mich. – DANTOM Systems and Diversified Data and Communications (d/b/a DIVDAT) are pleased to announce a strategic alliance. DIVDAT is exiting the third-party print & mail collection market and DANTOM has agreed to assume the customer relationships effective November 1, 2009. In addition, DANTOM will utilize specific DIVDAT advanced technology services for their collection customers.

“As DIVDAT strengthens our focus on preferential communication and EBPP, we remain committed to ensuring our clients’ needs are met and expectations are exceeded. We are grateful for the trust they have placed in DIVDAT over the years. We remain committed to honoring that trust,” said Jason Bierkle, Diversified Data’s president and CEO. “After a thorough and careful evaluation, I firmly believe that an alliance with DANTOM is in the best interest of our third-party, print and mail clients. DANTOM’s outstanding service and industry leadership has been demonstrated over a long period of time. I am convinced our customers will be delighted.” DIVDAT’s business focus includes products for healthcare providers, utility companies, insurance agencies and other organizations. Those products include print and mail, EBPP, payment processing and other messaging services.

“The addition of this highly-valued customer base provides DANTOM the ability to expand upon its industry- leading position in the collection letter marketplace and gain access to DIVDAT’s latest technology service offerings,” said Tim Schriner, DANTOM’s president and CEO. “We look forward to working with our new customers and providing them the value from our collection letter focus and expertise.”

About DANTOM Systems
DANTOM Systems, Inc. is the premier provider of collection letter services to the Accounts Receivable Management marketplace. DANTOM is SAS 70 Type II Certified and provides address information processing integrated into an award winning collection letter process utilizing FDCPA compliant customer service representatives, Six Sigma quality processes, certified project management with USPS acceptance and verification onsite for the highest quality print and mail delivery nationwide. DANTOM is located in Wixom, Michigan and now serves over 600 Credit & Collection customers nationwide. DANTOM is owned by Bolder Capital, LLC located in Chicago, Illinois. For more information, visit www.dantomsystems.com.

About DIVDAT
With its roots as a print and mail services provider, DIVDAT has evolved to become a leading provider of print and mail, online data processing, archiving and retrieval; preferential communication delivery solutions; EBPP; broadcast e-mail, fax and voice message services as well as direct marketing support services. DIVDAT is also the provider of CashLINCTM , a proprietary data integration, notification and response system. It is a comprehensive receivables management communication tool for companies in the collections, utilities, financial services, insurance, healthcare and telecommunications fields, among others. DIVDAT is located in Ferndale, Mich. For more information, visit www.divdat.com.

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Bharatbook.com Included New Report On "Collections and Debt Management In UK Personal Lending" In Its Market Report

2009-11-05T08:35:07-07:00

The current economic downturn is forcing many banks to rethink their debt management and collections strategies as more individuals become unemployed and unable to repay their loans.

Scope of this research

Analyzes the current personal loan market performance and provides forward looking estimates for the non-standard population up to 2013.

Assesses the process of debt management and recovery and provides analysis on how it can be enhanced throughout the current climate.

Research and analysis highlights

Generally, financial institutions do not invest in debt collection activity until there is an economic downturn. Devoting resources towards improving debt recovery generates an income stream that would otherwise be lost.

The single biggest obstacle for any bank offering a personal loan is assessing the likelihood of a potential default. To help eliminate this problem there needs to be a more rigorous lending criteria and a greater degree of customer data sharing.

Banks are offering advice on budgeting and financial maintenance to help reduce the threat of delinquency, especially for individuals in difficult situations.

Key reasons to purchase this research

Sizes and forecasts the non-standard population as well as providing historical data for the personal lending market in the UK.

Describes in detail the process of debt recovery for borrowers who have fallen into repayment difficulties.

Offers insight and recommendations for enhancing debt management and recovery strategies.

To know more and to buy a copy of your report feel free to visit : http://www.bharatbook.com/Market-Research-Reports/Collections-and-debt-management-in-UK-personal-lending.html

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Collection Agency Settles Class-Action Lawsuit for $2.55 million

2009-11-04T08:13:58-07:00

A California check collection firm Monday agreed to a $2.55 million judgment to settle a class action lawsuit in Pennsylvania. It is the first in a series of lawsuits against the company.

American Corrective Counseling Services (ACCS), based in San Clemente, Calif., agreed to the settlement Monday in a Delaware bankruptcy court, according to the Associated Press. The company did not admit any wrongdoing.

ACCS filed for bankruptcy protection in January of this year.

The lawsuit said that the company sent out letters to citizens that had bounced checks at various businesses. The letters appeared to come from district attorney offices around the state of Pennsylvania, warning the recipients that they were under criminal investigation for bouncing checks. ACCS said that they could clear up the matter if the consumer paid the debt with a penalty and attending a one-time education course.

Although ACCS was contracted with 20 different district attorneys in the state and the letters were legal, the civil lawsuit noted that it was a deceptive and unethical practice to threaten consumers with criminal action when none was likely to be forthcoming.

Approximately 15,000 Pennsylvanians were represented in the lawsuit by the Community Justice Project in Pittsburgh, according to the AP. Since ACCS cannot pay the $2.55 million settlement, the Project hopes to get the money from the company’s insurer.

ACCS faces more class-action lawsuits in California, Florida and Indiana.

In late 2007 and early 2008, ACCS lost a series of cases that exposed it to civil lawsuits. The firm argued that it was shielded from civil cases due to its business relationships with public offices (“ACCS Defends ’Sovereign Immunity’ Case as Public Citizen Mulls Class Action Suit,” Feb. 11, 2008). But after the company lost two cases where it was ruled that they were subject to lawsuits, consumer attorneys began to amass classes to go after ACCS.

Officials with ACCS could not be reached Wednesday for comment. But an ACCS official told insideARM last year that district attorneys were on their side in the matter.

"If we’re guilty, the DA’s office wouldn’t have been there arguing on our behalf,” ACCS Senior Vice President Kirk Barrus told insideARM, referring to a "friend of the court" brief filed on behalf of ACCS by an attorney with the California District Attorneys Association.

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Comtech Systems Partners with Service Exchange Network On Debt Collection Process Serving

2009-11-04T08:13:57-07:00

Glen Carbon, IL — Comtech Systems, Inc. and Service Exchange Network, LLC announced today a strategic partnership to connect users of Comtech’s Collect! ARM solution with Service Exchange Network’s Serve-X . The alliance will give users of Collect! the ability to streamline the operational efforts to serve documents due for process and actively monitor their status.

Both companies are market leaders in their respective areas.

Comtech Systems Inc. recognizes the necessity to enhance the operational efficiencies when accounts are moved to a state of process serving. Comtech has an understanding of both the labor and administrative efforts required to execute and monitor process serving mechanisms during the litigation procedure. H. Neal Cropper, CEO states "We are excited about the opportunity to harness the powers of the Serve-X technology to reduce overall costs and efforts required of our clients to execute process serving. Serve-X offers a platform that not only reduces levels of effort but enhances the tracking capabilities during this procedure. We look forward to the future with Serve-X as a best of breed strategic partner to provide yet another aspect to Comtech's growth as a full ARM solution provider."

Service Exchange Network, LLC realizes the essentialness of assisting Law Firms and Process Serving companies to produce more with fewer resources. The affiliation with Comtech Systems, Inc establishes Server-X as a world-wide provider of data and document exchange.

“We are enthusiastic about the relationship that has been built with Comtech Systems, Inc. as this will promote Serve-X to a vast amount of clients in the collection industry. We believe that Comtech is a progressive company and together with Service Exchange Network can revolutionize how the collection industry communicates to companies that offer process service”, said Greg Kellerman, President of Service Exchange Network, LLC.

About Comtech Systems, Inc:
Comtech was founded in 1988 and is headquartered in Victoria, BC, Canada with an additional office in Brisbane, Australia. Comtech's flagship product, Collect!, is widely recognized as the leading business management software solution for the world's receivables management industries.

Comtech's software is installed in 38 countries by over 1,200 companies including collection agencies, debt buyers, credit grantors, medical and dental billing offices, legal offices, municipal fine collection offices, car dealerships, rental application verification offices, credit grantors and a host of finance, credit and billing organizations.
For more information please contact: Robert Rutherford, VP at 800-661-6722, sales@collect.org or visit our website at www.collect.org

About Service Exchange Network, LLC
Service Exchange Network, LLC, (Serve-XTM), is an Illinois-based company founded in 2008. Serve-XTM was created to establish a cooperative bi-directional data transfer solution which is available to any independent Process Server or Attorney firm desiring to significantly mitigate costs and enhance their technology. Serve-X provides the technology that enables multiple attorneys to communicate with multiple process servers through interface integrations with software vendors.

Serve-XTM was launched nationally at the 2009 NARCA convention held in Boston, Massachusetts. It was an immediate success amongst Attorneys and Process Servers in attendance for its ease of use and uncomplicated design. Service Exchange Network, LLC members are supporters of NAPPS, CALSPRO, WAD, WADI, ACA, NARCA and CLLA.
For more information please contact: Kimberly Brown, Customer Support Specialist at 888-573-7839 ext 11, kimb@servex.biz or visit our website at www.servex.biz

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Executive Change: F.H. Cann & Associates Adds Walter Steele as COO

2009-11-03T07:59:14-07:00

F.H. Cann & Associates (“FHC”), a full service debt collection and receivables management firm, located just outside Boston, MA announced today that it has hired Walter Steele as its new Chief Operating Officer. As COO Walter brings decades of Recovery, Default Prevention, Portfolio Management, and Optimization experience to the organization. By extension, that vast knowledge base will now be directly translated into the collection efforts dedicated to the performance of every strategic business partner’s financial portfolio. Walter brings to FHC a long proven track record of highly successful performance in all aspects of the credit and collection industry. He is a Certified Black Belt in Six Sigma process improvement coupled with more than 20 years experience ranging in Financial Services, Energy, and Retail collection sectors.

Walter recently served as Director of Collections and Default Prevention at the publicly traded First Marblehead Corporation (FMD). In his role at First Marblehead, Walter was directly responsible for the Default Prevention performance of significant Private Student Loan portfolios on behalf of many of our nation’s largest Private Student Loan Trusts as well as some of the largest and most prestigious world wide banks. In this role Walter additionally served as a member of The Portfolio Management Senior Leadership Group responsible for developing strategy and implementation of business development initiatives.

Prior to Walter’s time with First Marblehead, he served as the New England Region Collections Manager for JP Morgan Chase Bank’s Custom Finance Division. In this role he directly contributed to the first New England region footprint of BankOne, which subsequently became JP Morgan Chase Bank through merger. At BankOne and Chase Walter directly managed the New England Region Custom Finance Collections Division as well as served as a member of the management leadership team for the New England Region Custom Finance Division.

“Walter’s vast industry experience and long list of process improvements has optimized collection portfolios for some of the largest and most impressive financial institutions. To be able to leverage his industry knowledge on behalf of our clients is a true strategic advantage for FHC. Walter is an expert in custom portfolio management strategies and the implementation of process improvements to maximize recoveries. Bringing Walter on board is a tremendous win for all involved, ” said Frank H Cann, Jr., President and CEO of F.H. Cann and Associates.

“I cannot put into words how excited I am to join the leadership team at FHC and be given the opportunity to directly contribute to the future success of such a dedicated organization. This company is filled with people who are committed to providing our clients with the highest level of service. We truly have the staff, the ability, and opportunity, to do some really special things” said Walter Steele, COO, F. H. Cann and Associates.

He continued, “By blending our collective experience, FHC has positioned itself to take full advantage of the next evolutionary step in the ARM Industry. The future of the ARM industry is all about “value add” for a client. It is about providing clients exceptional value in a full suite of Receivables Management services. It is about how we are able to customize everything we do for our client’s optimal performance. These are the tactical advantages we provide to our clients”.

FHC specializes in building strategic relationships with clients at every level of their financial portfolio’s delinquency lifecycle. Walter added, “Our goal is to not simply optimize our internal processes for performance, but also provide services to optimize our client’s internal processes for performance as well. It is a true partnership with our clients. At the end of the day, it is all about our commitment to exceed every client’s expectations and the ability to produce exceptional results in all aspects of the collections lifecycle”.

F.H.Cann and Associates is a full service debt collection and receivables management firm providing services for Recovery, Default Prevention, and Receivables Management Consulting. FHC is licensed and bonded in all fifty states.

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Asset Acceptance Reports Net Loss in Third Quarter 2009

2009-11-03T07:59:14-07:00

WARREN, Mich.-- Asset Acceptance Capital Corp. (NASDAQ: AACC), a leading purchaser and collector of charged-off consumer debt, today announced results for the quarter ended September 30, 2009.

Highlights from the third quarter include:

Acquired $37.2 million (net of buybacks) in charged-off consumer receivable portfolios, with an aggregate value of $1.6 billion, or 2.32% of face value;
Cash Collections of $77.8 million;
Operating expenses of 61.8 percent of Cash Collections; and
Expanded borrowing capacity to $84 million with amended credit agreement financial covenants.

Rion Needs, President and CEO, commented: “Our cash collections during the quarter, particularly on older vintage portfolios, were unfavorably impacted by the ongoing macro-economic landscape that continues to hinder consumers’ ability to repay their obligations. We began to execute on our strategy to leverage the attractive pricing conditions for our paper, increasing our purchasing by roughly 80% during the third quarter versus the second quarter of 2009. In addition, we believe that our now expanded capacity under the amended credit facility coupled with the more advantageous pricing environment positions us well to execute on our strategy in the remainder of 2009 and into 2010.”

Needs continued, “While the current macro backdrop remains challenging, we are in a position to increase both our operational efficiency, as well as our capacity to positively impact liquidation rates going forward. In the coming months we will be unveiling new technology that will automate several of the key functions of our call center representatives, increasing their efficiency substantially and allowing them to focus their time on accounts that they are most likely to liquidate. Additionally, we have made solid progress in achieving our goal of increasing collection account representative headcount, and signed a third-party agreement with an offshore firm on a per seat basis to expand capacity by 20% by year-end. While the last several quarters have been difficult, we have implemented a number of initiatives and strategies to make us more successful as market conditions improve.”

Third Quarter 2009 Review

Asset Acceptance reported cash collections of $77.8 million in the third quarter ended September 30, 2009, versus cash collections of $90.8 million in the year-ago period.

Total revenues were $47.7 million in the third quarter of 2009, compared to total revenues of $58.4 million in the third quarter of 2008. Amortization of purchased receivables in the third quarter of 2009 was 39.0% of total cash collections versus 36.0% of total cash collections in the third quarter of 2008. The Company reported a third quarter of 2009 net impairment charge of $6.8 million on purchased receivables, versus a net impairment charge of $3.1 million in the prior year quarter.

The net loss for the quarter was $1.6 million, or $0.05 per fully diluted share, compared to net income of $3.0 million, or $0.10 per fully diluted share, in the third quarter of 2008. Earnings Before Interest, Taxes, Depreciation and Amortization, including purchased receivable amortization (“Adjusted EBITDA”), decreased to $32.6 million in the third quarter of 2009, down 22.8% compared to the year-ago period. Please refer to the table on page four, which reconciles net income according to Generally Accepted Accounting Principles (“GAAP”) to Adjusted EBITDA.

During the third quarter of 2009, the Company invested $37.2 million to purchase charged-off consumer debt portfolios with a face value of $1.6 billion, for a blended rate of 2.32% of face value. This compares to the prior-year third quarter, when the Company invested $35.6 million to purchase consumer debt portfolios with a face value of $718.8 million, representing a blended rate of 4.95% of face value. All purchase data is adjusted for buybacks.

In addition to lower cash collections in the quarter, the Company reported lower operating expenses compared to the prior year. Total operating expenses in the quarter were reduced 4.0% to $48.1 million, from $50.1 million in the third quarter of 2008. For the 2009 third quarter, Asset Acceptance reported operating expenses of 61.8% of cash collections, up from 55.2% of cash collections in the prior year quarter.

Nine Months Ended September 30, 2009

For the nine-month period ended September 30, 2009, the Company reported cash collections of $259.2 million compared to cash collections of $286.2 million in the first nine months of 2008.

Total revenues in the first nine months of 2009 were $153.7 million versus $179.2 million in the first nine months of 2008. For the first nine months of 2009, amortization of purchased receivables was 41.0% of total cash collections versus 37.8% of total cash collections in the same period of last year. Net impairments for the first nine months of 2009 totaled $17.1 million, versus $8.4 million for the first nine months of 2008.

Net income in the first nine months of 2009 was $3.8 million, or $0.12 per fully diluted share, compared to net income of $11.9 million, or $0.39 per fully diluted share, in the same period of 2008. For the nine-month period ended September 30, 2009, Adjusted EBITDA declined to $125.1 million, a decrease of 11.8% when compared to the same nine-month period in 2008.

The Company invested $79.1 million to purchase charged-off consumer debt portfolios with a face value of $3.1 billion, for a blended rate of 2.57% during the first nine months of 2009, compared to $122.3 million with a face value of $3.2 billion, for a blended rate of 3.85% in the same period of 2008. All purchase data is adjusted for buybacks.

Amended Credit Agreement

Asset Acceptance also announced the signing of an amendment to its credit facility led by JPMorgan Chase Bank, N.A. Under the terms of the Credit Agreement, the Company has a five-year $100.0 million revolving credit facility expiring in June 2012 and a six-year $150.0 million term loan facility expiring in June 2013. The amendment loosened two of the more restrictive financial covenants within the agreement and made other changes:

The Leverage ratio has been loosened to 1.5 to 1.0, from 1.125 to 1.0, for approximately 2 years. At December 31, 2011, the leverage ratio will step down to 1.25 to 1.0 through expiration.
The planned step down of the Total Liabilities to Tangible Net Worth ratio on December 31, 2009 from 2.5 to 1.0 to 2.25 to 1.0 has been deferred until December 31, 2011.
The Minimum Tangible Net Worth requirement was increased by $5.0 million.
The LIBOR spread was increased by 100 basis points.
The Company paid fees and other costs of approximately $1.9 million in connection with the amendment.

“We are very pleased to announce the amended credit agreement with JPMorgan Chase. Under the amended agreement, our borrowing capacity has more than doubled to $84 million, creating additional flexibility to take advantage of the improved pricing conditions in the remainder of 2009 and into 2010,” commented Mark Redman, Senior Vice President and CFO of Asset Acceptance Capital Corp. “We have also made progress with Project Grow and our planned ramp up in paper purchases. We expect to see these initiatives begin to bear fruit, in terms of both productivity and our cost to convert accounts, as we move through the next twelve months.”

Third Quarter 2009 Earnings Conference Call

Asset Acceptance Capital Corp. will host a conference call at 5 p.m. Eastern today to discuss these results and current business trends. To listen to a live webcast of the call, please go to the investor section of the Company’s web site at www.AssetAcceptance.com. A replay of the webcast will be available until November 2, 2010.

About Asset Acceptance Capital Corp.
For more than 45 years, Asset Acceptance has provided credit originators, such as credit card issuers, consumer finance companies, retail merchants, utilities and others an efficient alternative in recovering defaulted consumer debt. For more information, please visit www.AssetAcceptance.com.

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Introducing Affordable Accounts Receivable Service by Aditech Accounting Services

2009-11-03T07:59:14-07:00

Ahmedabad, India -- While considering accounting services, from the pool of services a major service is accounts receivable. This service is meant for a series of accounting transaction which needs to be collected from the customer. The customer needs to pay the business or the person for the products or services that he/she has already received.

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