Asset Acceptance Capital Corp., a Warren, Mich., debt buyer that is under federal investigation for its collection practices, said lenders have agreed to loosen some restrictions in its credit facility and increase its borrowing limit.
The company said Friday that its borrowing limit rose to $65.9 million from $37 million, allowing it to meet purchasing goals for the year. Asset Acceptance will pay higher interest rates on some debt.
In April, Asset Acceptance learned the Federal Trade Commission had been investigating its collection practices since February 2006 and was notified it may have violated the Fair Credit Reporting Act, the Fair Debt Collection Practices Act and the Federal Trade Commission Act. The FTC offered Asset Acceptance a chance to negotiate a settlement.
A proposed consent decree includes certain monitoring and reporting obligations and customer disclosures as well as a civil monetary penalty. Asset Acceptance is reviewing the proposal with counsel.
Asset Acceptance said Friday that, for purposes of the credit facility, it was capping estimated costs of a settlement at $7 million, but said it could not estimate the potential liability.
