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Asta buys consumer receivables debt firm in Denver for $13.5M

By TERESA M. McALEAVY
STAFF WRITER

March 8, 2005 - Englewood Cliffs debt purchaser and collector Asta Funding Inc. said Monday that it paid about $13.5 million for a Denver-based company with debt portfolios worth $197 million if it collects every penny.

Asta shares were up 30 cents Monday to $23.02. The deal was a relief to investors who were frustrated with Asta since the company announced earnings on Feb. 9 and acknowledged that buying debt portfolios at low prices is getting more difficult. Shares fell from more than $28 that day to just above $21 at the end of February.

Asta buys portfolios from banks or other lenders who have given up on collecting certain consumer debts. It then collects on the debt for profit.

In addition to the new debt portfolios, purchasing Option Card LLC gives Asta a 3,000-square-foot facility in Denver with about 25 employees, including two veterans in debt buying and debt management.

"We view the acquisition as a $197 million portfolio purchase of consumer receivables at an attractive price with synergistic benefits to our existing business," Asta CEO Gary Stern said.

Stern, who runs his business by outsourcing much of his collections and legal work, said he it isn't certain if there will be layoffs at the new facility.

"The market is competitive, and we're happy with this strategy of not having a large infrastructure and continuing to grow the business with fixed overhead," Stern said during a conference call.

The deal also gives Asta access to an established legal network used by Option Card. And the company's computer software system is also considered an asset by Asta.

Plus the deal gives Asta a link to purchasing other debt portfolios in coming months that were once eyed by Option Card.

"We will have the right to purchase fresh flow for eight months," Stern said. "It's a new relationship for Asta that we hope to grow over time."

The deal follows an announcement Thursday by Asta that it spent about $20 million to purchase a separate debt portfolio worth up to $520 million.

Stern said the recent purchases bring the worth of Asta's portfolios to more than $715 million for the current fiscal quarter.

E-mail: mcaleavy@northjersey.com

LexisNexis Bankruptcy Experts Available for Interview; Editors-in-Chief of Collier on Bankruptcy Explain Changes in Pending Legislation

DAYTON, Ohio--(BUSINESS WIRE)--April 13, 2005--Henry J. Sommer, Esq. and Professor Alan N. Resnick are editors-in-chief of Collier on Bankruptcy, the nation's preeminent treatise in the bankruptcy field. They both are available for comment on consumer and business aspects, respectively, of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. Sweeping changes are being made to consumer bankruptcy law, and Sommer is available for comment on the implications for Americans contemplating bankruptcy. Resnick is available regarding business implications; however, the legislation vastly affects consumers.

Some of what's in store six months after the President signs the bill into law (and based on Sommer's expert opinion):

-- It will be more difficult and costly for Americans to file
bankruptcy due to added and higher expense in the way of
filing fees, attorney costs, credit counseling, financial
education courses and higher required payments to creditors.

-- It is likely 1 percent to 2 percent of people filing for
Chapter 7 will fail the means test. There are ways to plan to
help families fare better under the means test, such as timing
a bankruptcy case to ensure the previous six months of income
is below state median income.

-- The means test is being touted as the biggest change; but
other provisions in the legislation will affect consumers
more:

-- Higher fees
-- Credit and financial counseling requirement
-- Fewer attorneys in the industry
-- More paperwork and financial data requirements
-- New requirements in chapter 13 that will make it far
harder to propose and complete a repayment plan.

-- When bankruptcy is being considered:

-- Consult with a good bankruptcy attorney to help assess the
situation.
-- Be wary of financial consolidators who require the home as
collateral.
-- Consult an attorney about reputable financial or credit
counselors instead of seeking one independently.
-- Be aware of scam artists!

-- What's the real reason for the new requirement for financial
and credit counseling? Creditors are hoping for diversion away
from bankruptcy.

-- What happens when Chapter 13 doesn't work? (First you pay
attorneys, followed by domestic support, state welfare
agencies, trustees, health insurance and then creditors.)
Creditors continue collection activities, including phone
calls and wage garnishment, for years to come.

About LexisNexis

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Contacts

LexisNexis
Randy Dunham, 937-865-8836
mrandy.dunham@lexisnexis.com
OR
for LexisNexis
Jayme Soulati, 937-431-8446
jsoulati@earthlink.net

Heavily in debt? Cut back on shopping and borrowing

By Maureen Marud

May 17, 2005 - Micro-loans and retail purchases are the biggest culprits among factors contributing to over-indebtedness, says the Micro Finance Regulatory Council.

And the Consumer Profile Bureau has warned that low inflation and a "steep drop" in the prices of certain imported goods thanks to the strong rand, might tempt consumers to start running up high debts.

"We are seeing historically low prices for a wide range of imported electrical and electronic goods ranging from microwave ovens to music centres and TVs," says Fred Steffers, managing director of the Consumer Profile Bureau, South Africa's most comprehensive source of credit information.

Steffers said a recent study had revealed that local consumers had reduced their outstanding credit debt by 5% over the past 24 months.

Credit trends tracked over that period indicated that while spending had dramatically increased over the last nine to 12 months across all industries, the debt delinquency rate had decreased substantially.

Steffers said factors contributing to this upward trend included constant reductions in the interest rate, consumer confidence in the economy and consumer price index targets being met in general.

"We believe that the main reason for the positive trends we are seeing now is that consumers are becoming more aware that responsible debt management is in their own best interest as it gives them access to credit that can improve their lives," said Steffers.

But he warned consumers to be careful of stretching their credit to the limit.

That warning was voiced at about the same time that a study by the regulatory council pinpointed access to credit as a "major" contributing factor in over-indebtedness.

The council is researching reasons that lead people to over extend themselves with credit. It has launched a pilot debt relief programme that focuses also on the effects of over-indebtedness, especially among lower earners.

The programme's aim is to help over-indebted consumers to reduce debt to manageable levels, to equip them with financial information to help them balance their budgets, and to rehabilitate them, changing behaviour to encourage them not to incur excessive debt in future.

Peter Setou, education and communications manager of the Regulatory Council, said he hoped the research findings would help the council to put in place the best future interventions.

The pilot programme had already provided the council with invaluable information on the debt profile of those who participated.

"We found, for instance that the 35-44 and 45-59 age brackets were the biggest culprits. "This appears to indicate that over-indebtedness is correlated to age and economic activity. From this we deduce that access to credit is a major contributory factor."

Not surprisingly, men incurred almost twice as much debt as women, said Setou. "Generally women tend to be more cautious than men in dealing with money and also have less access to credit."

The worst affected was the group earning between R1 500 and R3 000, while the least affected were those earning R10 000 and above.

Those working in the retail sector incur the greatest debt, followed by civil servants and the unemployed.

Micro-loans and retail purchases are the two major contributory factors to over-indebtedness in all areas. - Consumer Reporter.