Collection agency and debt buyer Asset Acceptance Capital Corp. has said it will close two of its offices: one in Michigan and one in Maryland. This comes on the heels of their most recent earnings report.
The company increased their investments in purchased receivables by 33.9 percent for the full year 2006 from 2005 levels, and saw revenues increase 14.3 percent. But the interesting point is that during the fourth quarter of 2006, the Company invested a record $62.2 million to purchase charged-off consumer debt portfolios with a face value of $2.5 billion, which means that Asset Acceptance is buying debt at 2.46 cents on the dollar.
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[…] The problem involves the credit card industry’s business model of buying and selling debts. Many companies sell debts once they charge off an account, moving the debt to a company that specializes in collecting past due debt. These debt buying companies usually pay a huge discount; in fact, Asset Acceptance Corp., a debt buyer owned by Sallie Mae (the student loan folks), recently announced that they’re paying 2.9 cents on the dollar for charged-off debt. […]
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