Note 7: Deferred Court Costs, Net

Within the United States, the Company contracts with a nationwide network of attorneys that specialize in collection matters. The Company generally refers charged-off accounts to its contracted attorneys when it believes the related consumer has sufficient assets to repay the indebtedness and has, to date, been unwilling to pay. In connection with the Company’s agreement with the contracted attorneys, it advances certain out-of-pocket court costs (“Deferred Court Costs”). The Company capitalizes Deferred Court Costs in its consolidated financial statements and provides a reserve for those costs that it believes will ultimately be uncollectible. The Company determines the reserve based on its analysis of court costs that have been advanced and those that have been recovered. Historically, the Company wrote off Deferred Court Costs not recovered within three years of placement. However, as a result of a history of court cost recoveries beyond three years, the Company has determined that court costs are recovered over a longer period of time. As a result, in January 2013, on a prospective basis, the Company began increasing its deferral period from three years to five years. Collections received from debtors are first applied against related court costs with the balance applied to the debtors’ account balance.

Deferred Court Costs consist of the following as of the dates presented (in thousands):


	December 31, 2013			December 31, 2012
Court costs advanced	$	399,274		$	279,314
Court costs recovered		(147,166	)		(94,827	)
Court costs reserve		(210,889	)		(149,080	)

	$	41,219		$	35,407

A roll forward of the Company’s court cost reserve is as follows (in thousands):


	December 31, 2013			December 31, 2012			December 31, 2011
Balance at beginning of period	$	(149,080	)	$	(130,454	)	$	(113,239	)
Provision for court costs		(61,809	)		(53,946	)		(54,939	)
Write-off of reserve after the 36th month		—			35,320			37,724

Balance at end of period	$	(210,889	)	$	(149,080	)	$	(130,454	)