North America Credit Assn., one of the oldest and largest credit collection agencies in Southern California, notified clients Wednesday that it will cease operating April 30.
However, delinquent debtors will not be let off the hook. Companies that employ collection agencies generally have several firms doing collection work for them, and observers said competitors will quickly pick up the business.
An unknown number of employees will be laid off by the Pasadena company, which has annually collected about $500,000 in delinquent credit payments on behalf of companies such as GTE California, the Broadway department store chain and First Interstate Bank.
Until about three weeks ago, the company reportedly had about 200 employees, but owner Alexander Kreger told state authorities then that he was in the process of reducing that number “significantly.” A woman who answered the phone at the company late Wednesday said the firm had no comment to make.
Alonzo D. Hall, chief of the Bureau of Collections and Investigative Services, a unit of the State Department of Consumer Affairs that licenses the state’s 678 collection agencies, said bureau auditors will begin examining the company’s books Monday. Hall said he had no idea what prompted the planned shutdown.
For a time, he said, “we will take over the client accounts” to ensure that any money already collected on behalf of clients is turned over to them.
NACA, as the nearly 55-year-old agency is known, notified the bureau in Wednesday’s mail of its intention to close. Hall said he talked with Kreger three weeks ago after receiving an anonymous tip that NACA was having financial difficulties. Hall said Kreger at that time denied any financial woes but acknowledged that he was reducing his staff.
At GTE California in Thousand Oaks, spokeswoman Ilona Smith acknowledged that the company had been notified of NACA’s decision to close but said the action would have little effect on the phone company. “We have seven agencies that we use, plus we do some of our own in-house collections before we ever go to an agency,” she said.
Whereas the closing is not expected to affect consumers, competitors immediately set out to try to lure NACA’s clients.
“That’s dead meat out there now, and they will be picking at the bones,” Hall said. For the collection industry, he added, “it is really a big deal.”