EXHIBIT 10.1

ENCORE CAPITAL GROUP, INC.
8875 AERO DRIVE, SUITE 200
SAN DIEGO, CALIFORNIA 92123

June 13, 2005

Mr. Carl C. Gregory, III
[address]

Dear Mr. Gregory:

        This letter (the “Agreement”) will confirm the transition of your
services to Encore Capital Group, Inc. (the “Company”) from Chief Executive
Officer and Vice Chairman to Vice Chairman and confirm your willingness to
continue to serve as a director on the Company’s Board of Directors (the
“Board”), on the terms and conditions set forth in this Agreement. This
Agreement will have an effective date of June 13, 2005 (the “Effective Date”).

        1.     You hereby agree to continue to serve as the Company’s Chief
Executive Officer and Vice Chairman from the Effective Date through September
30, 2005, and on September 30, 2005, you hereby agree to resign as the Company’s
Chief Executive Officer.

        2.     This Agreement may only be amended, superseded or canceled and
the terms hereof waived, by a written instrument signed by you and the Company,
or in the case of a waiver, by the party waiving compliance. On the Effective
Date, the Employment Agreement, dated as of May 22, 2000, between you and the
Company is hereby terminated, and replaced and superseded in its entirety by
this Agreement.

        3.     You will report to the Board of Directors of the Company (the
“Board”). The Company shall furnish sufficient facilities, services, staffing
and assistance to enable you to perform your duties hereunder. The term of your
employment under this Agreement shall commence on the Effective Date and shall
continue through May 3, 2006 (the “Term”). Your employment may be terminated
prior to the expiration of the Term: (i) in the event that you shall die; (ii)
in the event that you shall become Disabled (for purposes of this clause (ii),
“Disabled” shall mean that you shall have failed, due to illness or other
physical or mental incapacity, to render services of the character contemplated
by this Agreement for an aggregate of more than ninety (90) calendar days during
any twelve (12) month period); (iii) for “Cause” (as hereinafter defined); (iv)
in the event that you give written notice to the Company of your resignation; or
(v) at any time by the Company “Without Cause” (as hereinafter defined).

        4.     The Company shall pay you a base salary of $397,451 per year (the
“Base Salary”) during the Term, less payroll deductions and all required
withholdings payable in regular periodic payments in accordance with Company
policy. Your Base Salary may be increased at the sole discretion of the Board.
You shall also, in accordance with Company policy and the terms of the
applicable plan documents, be eligible to participate in benefits under any
executive benefit plan or arrangement which may be in effect from time to time
and made available to the Company’s executive or key management employees,
including participation in the Company’s health, dental and disability plans.
You will be entitled to four (4) weeks of paid vacation per year. Accrued but
unused vacation days as of the end of a calendar year will be paid to you at the
end of the Term in accordance with Company policy.

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        5.     In addition to your Base Salary, you will be eligible to receive
an annual cash bonus. Your bonus target shall be 100% of your Base Salary. The
bonus amount you receive will be based on the Company and individual performance
assessed for each fiscal year relative to objectives agreed to in advance
between you and the Board. The bonus amount shall be paid in accordance with the
Company’s bonus policy for its executives. It is intended that any bonus
payments made under this Agreement will not be deferred compensation within the
meaning of Section 409A of the Internal Revenue Code of 1986. Accordingly, any
bonus amount will be paid out within two and one-half (2 1/2) months of the end
of the calendar year in which the bonus was earned and vested within the means
of Section 409A.

        6.     In addition to serving as Vice Chairman during the Term, you
agree: (i) to continue serving as a director of the Company until the Company’s
Annual Meeting of Stockholders held in 2006 (the “2006 Annual Meeting”); (ii) if
nominated to serve on the Board and then elected to the Board by the Company’s
stockholders at the 2006 Annual Meeting, to serve as a director of the Company
until the Company’s Annual Meeting of Stockholders held in 2007 (the “2007
Annual Meeting”); and (iii) if nominated to serve on the Board and then elected
to the Board by the Company’s stockholders at the 2007 Annual Meeting, to serve
as a director of the Company until September 11, 2007. In consideration for each
year of service as a director of the Company after the Term, if any, you will be
entitled to receive the same compensation, benefits and other rights the Company
provides to the other non-employee members of the Board. The Company also agrees
to reimburse you for all reasonable travel and other expenses you incur by in
conjunction with your Board service in a manner consistent with the Company’s
reimbursement policy for directors.

        7.     In consideration for your willingness to serve on the Board as
set forth above, pursuant to Section 4(iv) of your Non-Incentive Stock Option
Agreement granted on September 11, 2002 (the “2002 Option”), fifty percent (50%)
of the shares of Common Stock subject to the 2002 Option shall be deemed to have
vested on May 3, 2005, and the remaining fifty percent (50%) of the shares of
Common Stock subject to the 2002 Option shall vest on the earlier of May 3, 2006
or the 2006 Annual Meeting (the “End Vesting Date”). Notwithstanding the
foregoing, the shares of Common Stock subject to the 2002 Option shall
immediately vest in full if: (i) you are removed from (or not elected to) the
Board Without Cause (as defined hereinafter) prior to the End Vesting Date; (ii)
in the event you die prior to the End Vesting Date; (iii) in the event that you
shall become Disabled (as defined hereinafter) prior to the End Vesting Date; or
(iv) immediately prior to a Change of Control (as defined in Annex A). Nothing
in this paragraph shall prohibit the earlier vesting of the shares of Common
Stock subject to the 2002 Option in accordance with the existing terms of the
2002 Option.

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        8.     For purposes of this Agreement, “Cause” means (i) commission of
any act of fraud, willful misconduct or gross negligence by you in the course of
your employment hereunder which, in the case of gross negligence, has a material
adverse effect on the business or condition (financial or otherwise) of the
Company; (ii) willful material misrepresentation at any time by you to the Board
or the Chairman of the Board; (iii) willful failure or refusal to comply with
any of your obligations hereunder or with any reasonable and lawful instruction
of the Board; (iv) conviction of or pleading guilty to any felony, whether of
the United States or any state thereof or any similar foreign law to which you
may be subject; (v) any failure to substantially comply with any written lawful
rules, regulations, policies or procedures of the Company furnished to you
which, if not complied with, could reasonably be expected to have a material
adverse effect on the business of the Company or any of its material
subsidiaries or affiliates; or (vi) any willful failure to comply with the
Company’s, or any of its subsidiaries’ or affiliates’ policies regarding insider
trading; provided, however, that in the case of clause (v) of the definition of
“Cause” set forth in this section, if your failure or refusal referred to
therein is curable by you, then “Cause” shall not be deemed to exist unless you
fail to so cure within five (5) business days of your receipt from the Company
of a written request for such cure and such request to cure is the first such
request delivered under this section with respect to such failure.

        9.     If your employment is terminated Without Cause (as hereinafter
defined) by the Company, the Company shall pay to you a sum equal to your Base
Salary in effect as of the effective date of such termination for the then
remaining effective Term (the “Severance Period”), which shall be payable in one
lump sum within thirty (30) days following the date of such termination. In
addition, if your employment is terminated Without Cause by the Company, you
will be entitled to receive within thirty (30) days of such termination, 100% of
your annual bonus (computed using the amount of your bonus for the prior
calendar year). Further, if your employment is terminated Without Cause by the
Company, you will also be entitled to receive payment of all accrued and unpaid
vacation days and other benefits and reimbursements. Upon any termination of
your employment with the Company, you will return to the Company all Company or
its subsidiary-owned property, including, without limitation, credit cards,
computers, cellular phones, files, etc. In consideration of the monies to be
paid and the benefits to be provided to you, you agree to execute and deliver to
the Company on or before any payment by the Company a release substantially in
the form of Annex B hereto, failing which, except to the extent required by law,
the Company shall be relieved of all of its obligations hereunder.

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        10.     Termination “Without Cause” shall mean the termination of your
services for any reason other than (i) as set forth in clauses (i) through (iii)
of Section 3 or (ii) your voluntary resignation from employment with the Company
for any reason other than Good Reason (as defined below). For purposes of this
Agreement, “Good Reason” constitutes any of the following events: (i) a
substantial and material reduction of your responsibilities as Vice Chairman,
(ii) a reduction in your Base Salary, or (iii) a requirement that you relocate
outside the San Diego, California metropolitan area without your consent. For
purposes of clarification, it will not be considered a termination Without Cause
if the Company does not extend or continue your employment at the end of the
Term.

        11.     You acknowledge that as the Company’s Vice Chairman you will be
involved, at the highest level, in the development, implementation and
management of the Company’s and its subsidiaries’ businesses, strategies and
plans, including those which involve the Company’s and its subsidiaries’
finances, marketing, industrial relations, operations, acquisitions, business
models and programs. By virtue of your unique and sensitive position, your
employment by a competitor of the Company or its subsidiaries represents a
serious competitive danger to the Company and its subsidiaries and the use of
your talent, knowledge, and information about the Company’s and its
subsidiaries’ businesses, strategies, and plans can and would constitute a
valuable competitive advantage over the Company and its subsidiaries. In view of
the foregoing, you covenant and agree that during the term of your employment
and, during the Severance Period (if you are terminated Without Cause), you will
not engage or be engaged in a similar capacity or responsibility as you served
or performed for the Company, directly or indirectly, including, but not limited
to, as an employee, agent, consultant, manager, executive, owner, financing
source or stockholder (except as a passive investor owning less than one percent
(1%) interest in a publicly held company) in the Collection Business. For
purposes of this Section 11, “Collection Business” shall be defined as the
business of purchasing and/or collecting charged off consumer debt.
Notwithstanding the foregoing, if this Agreement is assigned by the Company as
provided herein, the terms of this section shall not apply to any business
engaged in by the assignee that is not related or similar to any business
engaged in (or contemplated to be engaged in) by the Company at the time of such
assignment.

        12.     You agree to treat as confidential and not to disclose to anyone
other than the Company, its subsidiaries and affiliated companies, and you agree
that you will not at any time during your employment and at any time thereafter,
without the prior written consent of the Company, divulge, furnish, or make
known or accessible to, or use for the benefit of anyone other than the Company,
its subsidiaries and affiliated companies, any information of a confidential
nature relating in any way to the business of the Company, its subsidiaries or
affiliated companies, or any of their respective affiliates, members,
shareholders, officers, employees or directors, or any other Person having a
direct business relationship with the Company or its subsidiaries, unless (i)
you are required to disclose such information by requirements of law, (ii) such
information is in the public domain through no fault of yours, or (iii) such
information has been lawfully acquired by you from other sources unless you know
that such information was obtained in violation of an agreement of
confidentiality. You further agree, that in consideration of this Agreement,
that you will refrain from engaging in any conduct or making any statement,
written or oral, which are detrimental to the Company, its subsidiaries or
affiliated companies or any of their respective affiliates, members,
shareholders, officers, employees or directors, other than statements to the
Chairman of the Board of the Company or the Board of Directors of the Company,
or any member thereof.

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        13.     You agree that in addition to any other remedy provided at law
or in equity (i) the Company shall be entitled to a temporary restraining order,
and both preliminary and permanent injunctive relief restraining you from
violating the provisions of the Paragraphs 11 and 12; and (ii) the Company’s
remaining obligations under this Agreement, if any, shall cease (other than
payment of your base salary through the date of such violation, plus $100.00 and
any earned but unpaid vacation or except as may be required by law) as a result
of any willful or reckless material violation of such provisions.

        14.     The provisions of the Sections 11, 12, 13, 14 and 18 of this
Agreement shall specifically survive any termination of this Agreement.

        15.     You agree that the Company may withhold from any amounts payable
to you hereunder all federal, state, local or other taxes that the Company
determines are required to be withheld pursuant to any applicable law or
regulation. You further agree that if the Internal Revenue Service or other
taxing authority (each, a Taxing Authority) asserts a liability against the
Company for failure to withhold taxes on any payment hereunder, you will pay to
the Company the amount determined by such Taxing Authority that had not been
withheld within ninety (90) days of notice to you of such determination. Such
notice shall include a copy of any correspondence received from a Taxing
Authority with respect to such withholding.

        16.     Any notice or other communication required or permitted under
this Agreement shall be in writing and shall be delivered personally, or sent by
certified, registered or express mail, postage prepaid, return receipt
requested. Any such notice shall be deemed given when so delivered personally,
or, if mailed, on the earlier of actual receipt or the third (3rd) business day
after the date of such mailing, (i) if to the Company, to the attention of the
General Counsel at the address first written above, and (ii) if to you, at the
address first written above.

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        17.     This Agreement and your rights and obligations hereunder may not
be assigned by you, provided that upon death your rights hereunder shall survive
and may be assigned, or conveyed by will, trust or operation of law, including
without limitation, intestate succession. The Company may assign this Agreement
and its rights, together with its obligations, hereunder in connection with any
sale, transfer or other disposition of all or substantially all of its assets or
business, whether by merger, consolidation or otherwise.

        18.     This Agreement constitutes the entire agreement between you and
Company with respect to the matters referred to herein and on the Effective Date
such Agreement will supersede all prior agreements, whether written or oral with
respect hereto, other than (i) the Indemnification Agreement dated December 6,
2000 between the Company and you and (ii) options that have been granted to you
prior to the date hereof (including the 2002 Option as modified by this
Agreement). This Agreement shall be governed by the laws of the State of
California, without regard to principles of conflicts of laws of such State.
Each party agrees to reimburse the other for any reasonable attorneys’ fees and
expenses expended by it to enforce its rights hereunder if the other party
willfully or recklessly breaches its obligations hereunder.

        If you agree with the terms of this Agreement, please date and sign the
copy of this letter enclosed for that purpose and return it to me.

Sincerely, ENCORE CAPITAL GROUP, INC.

By: /s/ Robin R. Pruitt

Agreed and Accepted:

/s/ Carl C. Gregory, III
Carl C. Gregory, III

Date: June 13, 2005

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Annex A

DEFINITION OF CHANGE OF CONTROL

For purposes of this Agreement, the term “Change of Control” shall mean and
include any one or more of the following events:

    (i)        the Company is merged into or consolidated with another
corporation, in a transaction in which, upon completion, the Company’s
stockholders beneficially own (within the meaning of Rule 13d-3 under the
Securities Exchange Act of 1934, as amended (the “Exchange Act”)), less than 50%
of the total voting securities entitled to vote generally in the election of
directors of the surviving or resulting company outstanding;

    (ii)        all or substantially all of the assets of the Company are
acquired by another corporation or business entity;

    (iii)        any person (as such term is used in Section 13(d) and 14(d)(2)
of the Exchange Act), other than any employee benefit plan of the Company or any
subsidiary of the Company or any entity holding shares of capital stock of the
Company for or pursuant to the terms of any such employee benefit plan in its
role as an agent or trustee for such plan, shall acquire 50% or more of the
Company’s outstanding voting stock entitled to vote generally in the election of
directors; or

    (iv)        a majority of the Directors of the Company being Individuals not
nominated by the Board of Directors.

        Notwithstanding the foregoing, the events described above shall not be
deemed to be a “Change of Control” if they occur as a result of (i) a
transaction involving any person (as defined in clause (iii) above) which is the
beneficial owner (as defined in clause (i) above) as of the date of this
Agreement, of more than 5% of the Company’s outstanding voting stock entitled to
vote generally in the election of directors or any “associate” or “affiliate” of
such person (as such terms are defined in Rule 405 promulgated under the
Securities Act of 1933, as amended) or (ii) in the case of clause (iii) above, a
person acquiring such 50% ownership position as a result of the acquisition by
the Company of its voting stock which reduces the number of outstanding shares
of voting stock of the Company.

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Annex B

GENERAL RELEASE
AND COVENANT NOT TO SUE

        TO ALL WHOM THESE PRESENTS SHALL COME OR MAY CONCERN, KNOW that:

        Carl C. Gregory, III (the “Executive”), on his own behalf and on behalf
of his descendants, dependents, heirs, executors and administrators and
permitted assigns, past and present, in consideration for the amounts payable to
the undersigned under that Letter Agreement dated as of June 13, 2005 (the
“Employment Agreement”) between Executive and Encore Capital Group, Inc. (the
“Company”), does hereby covenant not to sue or pursue any litigation (or file
any charge or otherwise correspond with any Federal, state or local
administrative agency) against, and waives, releases and discharges the Company,
and its respective assigns, affiliates, subsidiaries, parents, predecessors and
successors, and the past and present shareholders, employees, officers,
directors, representatives and agents or any of them (collectively, the “Company
Group”), from any and all claims, demands, rights, judgments, defenses, actions,
charges or causes of action whatsoever, of any and every kind and description,
whether known or unknown, accrued or not accrued, that Executive ever had, now
has or shall or may have or assert as of the date of this General Release
against any of them, including, without limiting the generality of the
foregoing, any claims, demands, rights, judgments, defenses, actions, charges or
causes of action related to employment or termination of employment or that
arise out of or relate in any way to the Age Discrimination in Employment Act of
1967 (“ADEA”), as amended, the Older Workers Benefit Protection Act, Title VII
of the Civil Rights Act of 1964, as amended, and other Federal, state and local
laws relating to discrimination on the basis of age, sex or other protected
class, all claims under Federal, state or local laws for express or implied
breach of contract, wrongful discharge, defamation, intentional infliction of
emotional distress, and any related claims for attorneys’ fees and costs;
provided, however, that nothing herein shall release any member of the Company
Group from any of its obligations under the Employment Agreement or any rights
to indemnification under any charter or by-laws (or similar documents) of any
member of the Company Group. The Executive further agrees that this General
Release and Covenant Not to Sue may be pleaded as a full defense to any action,
suit or other proceeding covered by the terms hereof which is or may be
initiated, prosecuted or maintained by the Executive, his heirs or assigns.
Notwithstanding the foregoing, the Executive understands and confirms that he is
executing this General Release and Covenant Not to Sue voluntarily and
knowingly, and this Covenant Not to Sue shall not affect the Executive’s right
to claim otherwise under ADEA. In addition, the Executive shall not be precluded
by this Covenant from filing a charge with any relevant Federal, State or local
administrative agency, but the Executive agrees not to participate in, and
agrees to waive his rights with respect to any monetary or other financial
relief arising from any such administrative proceeding.

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        The Company, on its own behalf and on behalf of its assigns, affiliates,
subsidiaries, parents, predecessors and successors, and its past and present
shareholders, employees, officers, directors, representatives and agents or any
of them, does hereby covenant not to sue or pursue any litigation (or file any
charge or otherwise correspond with any Federal, state or local administrative
agency) against, and waives, releases and discharges Executive and his heirs,
successors and assigns, descendants, dependents, executors and administrators,
past and present, and any of his affiliates and each of them (collectively, the
“Executive Releasees”) from any and all claims, demands, rights, judgments,
defenses, actions, charges or causes of action whatsoever, of any and every kind
and description, whether known or unknown, accrued or not accrued, that the
Company or any of its subsidiaries ever had, now has or shall or may have or
assert as of the date of this General Release against any of them, based on
facts known to any executive officer of the Company as of the date of this
General Release and Covenant Not to Sue (other than the Executive), including
specifically, but not exclusively and without limiting the generality of the
foregoing, any and all claims, demands, agreements, obligations and causes of
action arising out of or in any way connected with any transaction, occurrence,
act or omission related to Executive’s employment by the Company or any of its
subsidiaries or the termination of that employment; provided, however, that
nothing herein shall release the Executive Releasees from any obligations
arising out of or related in any way to Executive’s obligations under the
Employment Agreement or any agreement governing the terms of any stock options
granted to the Executive or impair the right or ability of the Company to
enforce the terms thereof.

        In consideration for the amounts payable to the Executive under the
Employment Agreement, the Executive agrees to cooperate, at the expense of the
Company Group, with the members of the Company Group in connection with all
litigation relating to the activities of the Company and its affiliates during
the period of the Executive’s employment with the Company including, without
limitation, being available to take depositions and to be a witness at trial,
help in preparation of any legal documentation and providing affidavits and any
advice or support that the Company or any affiliate thereof may request of the
Executive in connection with such claims.

        In furtherance of their respective agreements set forth above, each of
the Executive and the Company hereby expressly waives and relinquishes any and
all rights under any applicable statute, doctrine or principle of law
restricting the right of any person to release claims which such person does not
know or suspect to exist at the time of executing a release, which claims, if
known, may have materially affected such person’s decision to give such a
release. In connection with such waiver and relinquishment, each of the
Executive and the Company acknowledges that it is aware that it may hereafter
discover claims presently unknown or unsuspected, or facts in addition to or
different from those which it now knows or believes to be true, with respect to
the matters released herein. Nevertheless, it is the intention of each of the
Executive and the Company to fully, finally and forever release all such
matters, and all claims relative thereto which now exist, may exist or
theretofore have existed, as specifically provided herein. The parties hereto
acknowledge and agree that this waiver shall be an essential and material term
of the release contained above. In addition, and not by way of limitation to the
foregoing, each of the Executive and the Company fully understands and knowingly
and expressly waives its rights and benefits under Section 1542 of the
California Civil Code or under any similar provision of law. Section 1542 of the
California Civil Code states that:

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  “A general release does not extend to claims which the creditor does not know
or suspect to exist in his favor at the time of executing the release, which if
known by him must have materially affected his settlement with the debtor.”

Nothing in this paragraph is intended to expand the scope of the release as
specified herein.

        This General Release shall be governed by and construed in accordance
with the laws of the State of California, applicable to agreements made and to
be performed entirely within such State.

        To the extent that the Executive is forty (40) years of age or older,
this paragraph shall apply. The Executive acknowledges that he has been offered
a period of time of at least twenty-one (21) days to consider whether to sign
this General Release, which he has waived, and the Company agrees that the
Executive may cancel this General Release at any time during the seven (7) days
following the date on which this General Release has been signed by all parties
to this General Release. In order to cancel or revoke this General Release, the
Executive must deliver to the General Counsel of the Company written notice
stating that the Executive is canceling or revoking this General Release. If
this General Release is timely cancelled or revoked, none of the provisions of
this General Release shall be effective or enforceable and the Company shall not
be obligated to make the payments to the Executive or to provide the Executive
with the other benefits described in this General Release and all contracts and
provisions modified, relinquished or rescinded hereunder shall be reinstated to
the extent in effect immediately prior hereto.

        Each party agrees that as part of the consideration for this General
Release, they will not make disparaging or derogatory remarks, whether oral or
written, about the other party or its representatives.

        Each of the Executive and the Company acknowledge that they have entered
into this General Release knowingly and willingly and has had ample opportunity
to consider the terms and provisions of this General Release.

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        IN WITNESS WHEREOF, the parties hereto have caused this General Release
to be executed on this ____________ day of ______________, 200__.

                                                                    
Carl C. Gregory III

ENCORE CAPITAL GROUP, INC.

By:                                                              
Name:
Title: