Portfolio Recovery Associates Acquires Government Collections Firm Alatax for $17.5 million

NORFOLK, VA – Portfolio Recovery Associates, Inc. (NasdaqNM: PRAA), a company that purchases, collects and manages portfolios of defaulted consumer receivables, today announced it has acquired substantially all of the assets of Alatax, Inc., a privately held company that specializes in government collections.

The acquisition, which was completed on July 29, 2005, after the market closed, has a total price of $17.5 million, consisting of $16.1 million in cash and $1.4 million in Portfolio Recovery Associates common stock. Alatax’s two top executives, President Kennon Walthall and Executive Vice President Stephen Morris, have both signed long-term employment agreements and will continue to manage the company.

Portfolio Recovery Associates anticipates the acquisition will be accretive to earnings beginning immediately.

“Alatax represents an important investment for Portfolio Recovery Associates, providing us with entry into the large market for government accounts receivables management and creating yet another growth engine for the company. This transaction follows our strategy of selective acquisitions that bring us complimentary skills and expertise. In terms of its competencies, operating methods, philosophy and management, Alatax is a perfect fit for Portfolio Recovery Associates. We are excited to welcome Kennon, Stephen and the entire Alatax team to PRA,” said Steven D. Fredrickson, Chairman, President and Chief Executive Officer of Portfolio Recovery Associates.

Alatax, which is based in Birmingham, Alabama, was founded in 1980 and has become a leading provider of outsourced business revenue administration, audit and debt discovery/recovery services for local governments. Alatax has a workforce of about 80 employees and contractors. Although most of its clients are located in Alabama (where it operates as Alatax), the company recently has begun expanding into surrounding states (where it operates as Revenue Discovery Systems (RDS)).

“Alatax is proud to be joining Portfolio Recovery Associates, a dynamic and customer-oriented company with a clear focus on steady, disciplined growth. Together with PRA, we will continue to cement our leading position in the government collections market. Now, as part of a larger organization with greater resources, we will be able to more quickly refine and strengthen our current services as well as speed up the development and deployment of additional services we have in our development pipeline. Our current and future government clients will also benefit from the multi-state presence of PRA,” said Kennon Walthall, President of Alatax.

As previously announced, Mr. Fredrickson and Kevin P. Stevenson, Portfolio Recovery Associates’ Chief Executive Officer and Chief Financial Officer, respectively, are scheduled to make a presentation to the investment community at the America’s Growth Capital 2nd Annual Growth Conference in Boston, Massachusetts, on Monday, August 1, 2005. At that time, they may discuss the Alatax acquisition.

Investors interested in listening to the presentation may do so through a live web cast provided on the Investor Relations page of Portfolio Recovery Associates’ website at www.portfoliorecovery.com, under Event Calendar. The link will be accessible at approximately 2:00 p.m. EDT the day of the conference. A replay will be available approximately 15 minutes after the presentation is completed and will remain available for seven days.

Kaulkin Ginsberg Company (www.kaulkin.com) advised Alatax on this transaction.

About Portfolio Recovery Associates, Inc.
Portfolio Recovery Associates is a full-service provider of outsourced receivables management and related services. Portfolio Recovery Associates purchases, collects and manages portfolios of defaulted consumer receivables and provides collateral location services for credit originators. Defaulted consumer receivables are the unpaid obligations of individuals to credit originators, including banks, credit unions, consumer and auto finance companies, retail merchants and other providers of goods and services. The defaulted consumer receivables Portfolio Recovery Associates collects are generally either purchased from sellers of defaulted consumer debt or are collected on behalf of debt owners on a commission basis.