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									18 I November 2008 Collector
        he current economic downturn          Varrichio said. “Projections were based      prices that should become more
        has affected the financial world in   on the market remaining relatively           collectible at some point in the future.”
        ways never before experienced,        stable. There were times in 2006 and            This has had an adverse effect on the
and the asset buying industry is no           2007 when many debt buyers believed          resale market. According to Wood, as
exception. Predicting how the industry        that high prices were a permanent shift      prices have fallen, the prices resellers
will respond to the trouble and               and not a temporary bubble.                  have been able to demand have also
determining the next best move for debt          “Buyers making bids in the current        come down.
buyers has many industry veterans             environment will have to adjust their           “The drops in both places have been
puzzled.                                      models to match the current economic         similar, but it has affected companies
                                              conditions with possible continued           hoping the margin would be higher,”
THE FACTS                                     liquidation degradation rather than          Wood said.
   With collection liquidation rates          basing it on historical models.”                Similarly, buyers currently locked
dropping considerably in the past year           Buyers should work under the              into forward-flow agreements will have
and portfolio prices experiencing a           assumption that conditions may not           to continue paying the prices they
dramatic dip as a result, debt buyers         improve any time soon and alter their        initially negotiated, which might be
have been forced to reexamine their           models accordingly.                          higher than the current market price.
projection models when purchasing                “We have adjusted our models to
delinquent debt.                              expect liquidations to continue to slide     ARE PRICES WHERE THEY SHOULD BE?
   Mike Varrichio, president of Global        until we see some light at the end of the        Some industry professionals believe
Acceptance Credit Company, a                  tunnel,” Varrichio said. “We are             prices are in line with market
distressed consumer debt buyer based in       predicting a worsening scenario.”            conditions, while others think we
Arlington, Texas, said most debt buyers          Funding portfolio purchases has also      haven’t seen the bottom yet. One thing
are experiencing margin squeezes              become increasingly difficult due to the     everyone can agree on is that prices

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