UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549


                                    FORM 10-Q

(Mark One)

  X      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
-----    EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2001  or
                               -------------
         TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
-----    EXCHANGE ACT OF 1934

For the transition period from ___________ to ____________

Commission file number  333-57429
                        ---------

                             NATIONWIDE CREDIT, INC.
       ------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

                   Georgia                          58-1900192
----------------------------------------     ----------------------------
        (State or other jurisdiction               (IRS Employer
      of incorporation or organization)        Identification Number)


2015 Vaughn Road, Building 300, Kennesaw, GA           30144
--------------------------------------------------------------------------------
(Address of principal executive offices)             (Zip Code)


Registrant's telephone number, including area code:     (770) 933-6659
                                                        --------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by  Sections  13 or 15(d)  of the  Securities  Exchange  Act of 1934
during the preceding 12 months (or for such shorter  period that the  registrant
was  required  to file such  reports),  and (2) has been  subject to such filing
requirements for the past 90 days.

                                                  Yes   X    No
                                                      -----     -----

                                       1
<PAGE>


                             NATIONWIDE CREDIT, INC.

                               INDEX TO FORM 10-Q

                                  June 30, 2001


                                                                    Page
Part I.  FINANCIAL INFORMATION

    Item 1.  Financial Statements

         CONSOLIDATED BALANCE SHEETS  -----
         As of June 30, 2001 and December 31, 2000                    3

         CONSOLIDATED STATEMENTS OF OPERATIONS -----
         Three and six months ended June 30, 2001 and 2000            5

         CONSOLIDATED STATEMENTS OF CASH FLOWS -----
         Six months ended June 30, 2001 and 2000                      6

         NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                   7

    Item 2.  Management's Discussion and Analysis of
             Financial Condition and Results of Operations           10

    Item 3.  Quantitative and Qualitative Disclosures
             about Market Risk                                       15

Part II.  OTHER INFORMATION

    Item 5.  Other Information                                       16

    Item 6.  Exhibits and Reports on Form 8-K                        16

    Signature Page                                                   17


                                       2
<PAGE>

                          Part I. FINANCIAL INFORMATION

Item 1.  Financial Statements

                             NATIONWIDE CREDIT, INC.
                           CONSOLIDATED BALANCE SHEETS
                                   (UNAUDITED)
                          (Dollar amounts in thousands)

                                     ASSETS


                                                        June 30,    December 31,
                                                          2001         2000
                                                      --------------------------

CURRENT ASSETS
 Cash and cash equivalents                            $   1,556     $   2,426
 Cash held for clients                                    2,183         1,604
 Accounts receivable, net of allowance of
    $640 and $699, respectively                          21,779        16,945
 Prepaid expenses and other current assets                3,701         3,678
                                                      --------------------------
TOTAL CURRENT ASSETS                                     29,219        24,653

 Property and equipment, less accumulated
    depreciation and amortization of $18,280
    and $14,845, respectively                            16,822        17,934
 Goodwill, less accumulated amortization of
    $12,351 and $10,587, respectively                    93,519        95,283
 Other intangible assets, less accumulated
    amortization of $19,562 and $18,845, respectively       717         1,434
 Deferred financing costs, less accumulated
    amortization of $3,717 and $3,399, respectively       3,385         3,567
 Other assets                                               772         1,184
                                                      --------------------------
TOTAL ASSETS                                          $ 144,434     $ 144,055
                                                      ==========================

The accompanying notes are an integral part of these consolidated statements.

                                       3
<PAGE>

                             NATIONWIDE CREDIT, INC.
                           CONSOLIDATED BALANCE SHEETS
                                   (UNAUDITED)
                          (Dollar amounts in thousands)

                      LIABILITIES AND STOCKHOLDER'S DEFICIT



                                                        June 30,    December 31,
                                                          2001         2000
                                                      --------------------------

CURRENT LIABILITIES
 Collections due to clients                           $    2,183     $   1,604
 Accrued compensation                                      4,100         3,997
 Accounts payable                                          2,211         3,446
 Accrued severance and office
    closure costs, current                                 1,040         1,771
 Other accrued liabilities                                 7,446         7,814
 Short-term debt                                             224           185
 Current portion of capital leases                           520           636
 Current maturities of long-term debt                      1,616         1,625
                                                      --------------------------
TOTAL CURRENT LIABILITIES                                 19,340        21,078

Accrued severance and office
    closure costs, long-term                                 ---           576

Capital lease obligations, less current portion            1,206         1,451

Long-term debt                                           132,279       130,959
                                                      --------------------------
TOTAL LIABILITIES                                        152,825       154,064

STOCKHOLDER'S DEFICIT
 Common stock - $.01 par value
    Authorized: 10,000 shares;
    Issued and outstanding - 1,000 shares                    ---           ---
 Additional paid-in capital                               54,465        49,465
 Accumulated deficit                                     (62,716)      (59,334)
 Notes receivable - officers                                (140)         (140)
                                                      --------------------------
TOTAL STOCKHOLDER'S DEFICIT                               (8,391)      (10,009)
                                                      --------------------------

TOTAL LIABILITIES
AND STOCKHOLDER'S DEFICIT                             $  144,434     $ 144,055
                                                      ==========================


The accompanying notes are an integral part of these consolidated statements.


                                       4
<PAGE>

                             NATIONWIDE CREDIT, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)
                          (Dollar amounts in thousands)

<TABLE>
<CAPTION>


                                                For the Three Months               For the Six Months
                                                   Ended June 30,                    Ended June 30,
                                           -------------------------------    ------------------------------
                                                 2001            2000              2001            2000
                                           -------------- ----------------    -------------- ---------------
<S>                                         <C>            <C>               <C>            <C>


REVENUES                                     $   34,779      $  33,821          $  69,345      $  67,314

EXPENSES
  Salaries and benefits                          20,947         21,569             41,694         43,257
  Telecommunication                               1,693          1,173              3,102          2,492
  Occupancy                                       1,720          1,488              3,457          3,005
  Other operating and administrative              5,438          5,448             10,848         10,243
  Depreciation and amortization                   3,002          2,929              6,022          5,733
  Provision for employee severance
     and office closure                             502          1,274                502          1,274
  Other unusual charges                              --            779                 --          1,113
                                           -------------- ----------------    -------------- ---------------
TOTAL EXPENSES                                   33,302         34,660             65,625         67,117
                                           -------------- ----------------    -------------- ---------------
OPERATING INCOME (LOSS)                           1,477           (839)             3,720            197
Interest expense                                  3,501          3,524              7,102          7,011
                                           -------------- ----------------    -------------- ---------------
Loss before income taxes                         (2,024)        (4,363)            (3,382)        (6,814)
Provision for income taxes                           --             --                 --             --
                                           -------------- ----------------    -------------- ---------------
NET LOSS                                     $   (2,024)     $  (4,363)         $  (3,382)     $  (6,814)
                                           ============== ================    ============== ===============

</TABLE>

The accompanying notes are an integral part of these consolidated statements.

                                       5
<PAGE>

                             NATIONWIDE CREDIT, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
                          (Dollar amounts in thousands)

                                                          For the Six Months
                                                             Ended June 30,
                                                      --------------------------
                                                            2001         2000
                                                      --------------------------

OPERATING ACTIVITIES
Net loss                                                $  (3,382)   $  (6,814)
Adjustments to reconcile net loss to net cash
     used in operating activities:
     Depreciation and amortization                          7,091        6,491
     Other non-cash charges                                    73        1,480
Changes in operating assets and liabilities:
     Accounts receivable                                   (4,775)         437
     Prepaid expenses and other assets                       (362)      (2,596)
     Accrued compensation                                     103         (492)
     Accounts payable and other accrued liabilities        (2,966)         285
                                                      --------------------------

Net cash used in operating activities                      (4,218)      (1,209)

INVESTING ACTIVITIES
Purchases of property and equipment                        (2,505)      (5,728)

FINANCING ACTIVITIES
Capital contribution from Parent                            5,000        6,000
Repayment of long-term debt                                  (666)         (97)
Principal payments on capital leases                         (361)        (194)
Net borrowings under revolving credit facility              1,977        8,229
Proceeds from short-term debt                                 491          ---
Repayment of short-term debt                                 (452)         ---
Debt issuance costs                                          (136)         (92)
                                                      --------------------------
Net cash provided by financing activities                   5,853       13,846

(Decrease) increase in cash and cash equivalents             (870)       6,909

Cash and cash equivalents at beginning of period            2,426          ---
                                                      --------------------------


Cash and cash equivalents at end of period              $   1,556    $   6,909
                                                      ==========================

SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for interest                                  $   7,158    $   6,007
Fixed assets acquired under capital lease obligations   $     ---    $     727


The accompanying notes are an integral part of these consolidated statements.


                                       6
<PAGE>

                             NATIONWIDE CREDIT, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

1.     BASIS OF PRESENTATION

The accompanying  unaudited consolidated financial statements have been prepared
in accordance with accounting principles generally accepted in the United States
for interim  financial  information  and with the  instructions to Form 10-Q and
Article 10 of Regulation  S-X.  Accordingly,  certain  information  and footnote
disclosures  required by accounting  principles generally accepted in the United
States for complete financial  statements have been excluded.  In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered
necessary  for  a  fair  presentation   have  been  included.   All  significant
intercompany  accounts and transactions  have been eliminated in  consolidation.
The accompanying  unaudited  consolidated financial statements should be read in
conjunction with the audited  consolidated  financial  statements of the Company
for the year ended December 31, 2000 included in Form 10-K.

Certain  reclassifications  have been made to prior year amounts to conform with
the current year presentation.

Operating  results  for  the  six-month  period  ended  June  30,  2001  are not
necessarily  indicative  of the results that may be expected for the year ending
December 31, 2001.

2.     NATURE OF OPERATIONS

The Company is among the largest  independent  providers of accounts  receivable
management services in the United States. The Company's client base is comprised
of financial institutions,  government agencies, retail and consumer businesses,
telecommunications  companies and healthcare  providers  located  throughout the
United States.

3.     LONG-TERM DEBT AND STOCKHOLDER'S DEFICIT

  The following table summarizes the Company's long-term debt (in thousands):

                                     June 30, 2001    December 31, 2000
                                   ------------------------------------
  10.25% Senior Notes, due 2008        $ 100,000          $ 100,000
  Term loan facility                      20,888             21,512
  Revolving credit facility               12,940             10,963
  Security agreement                          67                109
                                   ------------------------------------
                                         133,895            132,584
  Less current maturities                 (1,616)            (1,625)
                                   ------------------------------------
                                       $ 132,279          $ 130,959
                                   ====================================


On January 16, 2001, the Company amended its revolving credit facility to obtain
a new  overadvance  commitment (the  "Overadvance  Facility") and a new customer
commitment  (the  "Customer  Facility").  Under the  Overadvance  Facility,  the
Company can borrow $2.0 million at an interest  rate equal to the Base Rate plus
3.75%.  The facility expires on December 31, 2001 but can be extended to January
28,  2004 if the  eligible  accounts  receivable  balance is greater  than $14.7
million.  Under the Customer Facility, the Company can borrow $2.0 million at an
interest rate equal to the Base Rate plus 3.75%.  Borrowings  under the Customer

                                       7
<PAGE>

Facility  must be used to make payments to customers of the Company to cover the
float in respect of checks  deposited into one or more trust funds by debtors of
such  customers and can be  outstanding  for a maximum of 5 days. The Company is
limited to two borrowings per calendar  month under the Customer  Facility.  The
Customer  Facility  expires on December  31, 2001.  In addition,  the Company is
required  to  pay a  commitment  fee  of  .625%  on the  unused  portion  of the
Overadvance Facility and Customer Facility. Among other restrictions, the credit
agreement, as amended, requires the Company to maintain certain financial ratios
and limits the Company's ability to incur additional debt, pay dividends, and to
make acquisitions and capital expenditures. At June 30, 2001, the Company was in
compliance with all covenants, as amended on January 16, 2001.

In order to fund the working capital requirements  associated with expanding the
business, the Company received additional equity investment of $5.0 million from
its stockholder in January 2001.

4.     COMMITMENTS AND CONTINGENCIES

The Company is involved in certain  litigation arising in the ordinary course of
business. In the opinion of management, the ultimate resolution of these matters
will not have a material adverse effect on the Company's  consolidated financial
position or results of operations.

5.     PROVISION FOR EMPLOYEE SEVERANCE, OFFICE CLOSURE AND
       OTHER UNUSUAL CHARGES

Provision for Employee Severance and Office Closure

In the three months ended June 30, 2001, the Company increased the provision for
office  closure by $0.5 million as a result of settling a dispute  related to an
office that was previously closed.

      Changes in the  accrual  associated  with office  closures  from
      December  31, 2000 to June 30, 2001 are as follows (in thousands):
<TABLE>
<CAPTION>

                                                                                       Write-off
                                                     Employee     Relo-     Office     hardware
                                                     Severance    cation    Closure    /software    Total
                                                   ------------ ---------- ---------- ----------- ----------
                                                   ------------ ---------- ---------- ----------- ----------
     <S>                                             <C>         <C>       <C>          <C>         <C>

      Accrued costs as of December 31, 2000           $ 505       $ 386     $ 1,190     $ 266        $ 2,347

      Re-estimation of the accrued costs                228        (133)        171      (266)           ---

      Additions made to the accrued costs               ---         ---         502       ---            502

      Amounts charged against the provision            (565)       (173)     (1,071)      ---         (1,809)
                                                   ------------ ---------- ---------- ----------- ----------
      Accrued costs as of June 30, 2001               $ 168       $  80    $    792     $ ---        $ 1,040
                                                   ============ ========== ========== =========== ==========
</TABLE>

Other Unusual Charges

In the last  quarter  of 1999 and the first  six  months  of 2000,  the  Company
expanded its  pre-chargeoff  services to provide more  comprehensive  collection
solutions  for its  clients.  This  expansion  required  the addition of two new
facilities. Accordingly, the Company incurred $0.8 million in the second quarter
of 2000 and $1.1  million  in the first six months of 2000 for the costs of such
expansion activities.

                                       8
<PAGE>

6.     RECENT ACCOUNTING DEVELOPMENTS

In July 2001, the FASB issued Statements of Financial  Accounting  Standards No.
141 ("SFAS  No.  141),  Business  Combinations,  and No.  142  ("SFAS No.  142),
Goodwill and Other  Intangible  Assets.  SFAS No. 141 requires that the purchase
method of accounting be used for all business combinations  initiated after June
30, 2001 as well as all purchase  method business  combinations  completed after
June 30, 2001. SFAS No.142 will require that goodwill and intangible assets with
indefinite  useful  lives  no  longer  be  amortized,  but  instead  tested  for
impairment at least annually in accordance  with the provisions of SFAS No. 142.
SFAS No. 142 will also require that intangible assets with definite useful lives
be amortized over their  respective  estimated  useful lives to their  estimated
residual  values,  and reviewed for impairment in accordance  with SFAS No. 121,
Accounting for the Impairment of Long-Lived  Assets and for Long-Lived Assets to
Be Disposed Of.

The Company is required to adopt the provisions of SFAS No. 141 immediately, and
SFAS No. 142 effective January 1, 2002.  Goodwill and intangible assets acquired
in  business  combinations  completed  before  July 1, 2001 will  continue to be
amortized prior to the adoption of SFAS No. 142.

SFAS No. 141 will  require  upon  adoption  of SFAS No.  142,  that the  Company
evaluate its existing  intangible  assets and goodwill  that were  acquired in a
prior purchase business combination, and to make any necessary reclassifications
in order to conform with the new criteria in SFAS No. 141 for recognition  apart
from  goodwill.  Upon  adoption of SFAS No. 142, the Company will be required to
reassess the useful lives and residual values of all intangible  assets acquired
in purchase business  combinations,  and make any necessary  amortization period
adjustments  by the end of the first  interim  period after  adoption,  which is
March 31, 2002 for the Company.  In addition,  to the extent an intangible asset
is identified as having an indefinite  useful life, the Company will be required
to test the intangible asset for impairment in accordance with the provisions of
SFAS No. 142.

As of the date of adoption,  the Company expects to have unamortized goodwill in
the amount of $91,754 that will be subject to the transition  provisions of SFAS
No. 141 and 142.  Amortization expense related to goodwill was $3,528 and $1,764
for the year ended  December  31, 2000 and the six months  ended June 30,  2001,
respectively.  Because of the  extensive  effort  needed to comply with adopting
SFAS No. 141 and 142, it is not practicable to reasonably estimate the impact of
adopting these statements on the Company's  financial  statements at the date of
this  report,  including  whether  any  transitional  impairment  losses will be
required to be  recognized  as the  cumulative  effect of a change in accounting
principle.

                                       9
<PAGE>

                             NATIONWIDE CREDIT, INC.

Item 2.

                      MANAGEMENT'S DISCUSSION AND ANALYSIS

                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS
(Three months ended June 30, 2001 compared to three months ended June 30, 2000)

Revenues.  Total revenue increased $1.0 million or 3% from $33.8 million for the
three  months  ended June 30, 2000 to $34.8  million for the three  months ended
June  30,  2001.  Excluding  $1.0  million  of  2000  revenue  from a  directory
assistance  program to a major  telecommunications  company,  which the  Company
discontinued  in July 2000,  revenue grew $2.0 million or 6% from $32.8  million
for 2000 to $34.8  million  for 2001.  The  increase  was due to a $3.2  million
increase   in   pre-chargeoff   revenues   primarily   from  a  client   in  the
telecommunications  industry,  partially  offset by a $1.2  million  decrease in
contingent  fee revenues.  The decrease in contingent  fee revenue was primarily
due to a rate  reduction  by one of the  Company's  largest  financial  services
clients.

Expenses.  Salaries and benefits  expense  decreased $0.6 million or 3% to $20.9
million  for the three  months  ended June 30,  2001 from $21.5  million for the
three months  ended June 30, 2000.  This  decrease was  primarily  the result of
reorganizing the Company's operations and closing small unprofitable  collection
centers in 2000.

Telecommunications expense increased $0.5 million or 44% to $1.7 million for the
three  months ended June 30, 2001 from $1.2 million for the same period in 2000.
The increase was primarily the result of increased  collection  calls due to the
expansion of predictive dialer technology and, to a lesser extent, the continued
growth of the business.

Occupancy  expense  increased  $0.2 million or 16% to $1.7 million for the three
months  ended June 30, 2001 from $1.5  million for the same period in 2000.  The
increase  was the  result of annual  rent  escalations  in 2001 and the  Company
leasing  additional  facilities in 2000 to  accommodate  the  Company's  growth.
Although the Company  eliminated  small  unprofitable  call centers in 2000, the
majority of the cost savings associated with the reorganization of the Company's
operations were in salaries and benefits and other operating and  administrative
expenses.

Other operating and administrative expenses of $5.4 million for the three months
ended June 30, 2001 were unchanged from the same period in 2000.

Depreciation  and  amortization  expense  increased  $0.1  million or 2% to $3.0
million  for the three  months  ended June 30,  2001 from $2.9  million  for the
period  ended  June  30,  2000.   The  increase  was  primarily  the  result  of
depreciation on capital assets acquired in 2000 to support the Company's revenue
growth.

Provision for employee severance and office closure.  The provision for employee
severance  and office  closure was $0.5  million for the three months ended June
30,  2001,  compared to $1.3  million for the same period in 2000.  In the three
months ended June 30,  2001,  the Company  increased  the  provision  for office
closure by $0.5  million as a result of settling a dispute  related to an office
that was previously  closed. In the three months ended June 30, 2000 the Company
recorded a provision for employee  severance and office  closure of $1.3 million
to consolidate and reorganize its operations.


                                       10
<PAGE>

Other unusual charges.  In the second quarter of 2001, the Company did not incur
any other unusual  charges.  In the second quarter of 2000, the Company incurred
$0.8 million of other unusual  charges  related to expanding  its  pre-chargeoff
services to provide more comprehensive collection solutions for its clients.

Operating  Income.  Operating income was $1.5 million for the three months ended
June 30,  2001,  an  increase of $2.3  million  from an  operating  loss of $0.8
million for the same period in 2000.  This  increase was primarily the result of
increased revenues, elimination of small unprofitable collection centers in 2000
and the reorganization of certain operations in 2000.

Interest  Expense.  Interest expense was $3.5 million for the three months ended
June 30, 2001 and the three  months ended June 30,  2000.  Increased  borrowings
against the revolving credit facility were offset by lower interest rates.

Net Loss.  The Company  incurred a net loss for the three  months ended June 30,
2001 of $2.0  million  compared to a net loss of $4.4 million in the same period
of 2000, as a result of the factors explained above.

(Six months ended June 30, 2001 compared to six months ended June 30, 2000)

Revenues.  Total revenue increased $2.0 million or 3% from $67.3 million for the
six months  ended June 30, 2000 to $69.3  million for the six months  ended June
30, 2001.  Excluding  $2.6  million of 2000 revenue from a directory  assistance
program to a major telecommunications company, which the Company discontinued in
July 2000,  revenue  grew 7% from $64.7  million  for 2000 to $69.3  million for
2001. The increase was due to a $7.4 million increase in pre-chargeoff  revenues
primarily from a client in the telecommunications  industry, partially offset by
a $2.8 million  decrease in contingent fee revenues.  The decrease in contingent
fee  revenue  was  primarily  due to a rate  reduction  by one of the  Company's
largest financial services clients.

Expenses.  Salaries and benefits  expense  decreased $1.6 million or 4% to $41.7
million for the six months  ended June 30,  2001 from $43.3  million for the six
months  ended  June  30,  2000.  This  decrease  was  primarily  the  result  of
reorganizing the Company's operations and closing small unprofitable  collection
centers in 2000.

Telecommunications expense increased $0.6 million or 24% to $3.1 million for the
six months  ended June 30,  2001 from $2.5  million for the same period in 2000.
The increase was primarily the result of increased  collection  calls due to the
expansion of predictive dialer technology and, to a lesser extent, the continued
growth of the business.

Occupancy  expense  increased  $0.5  million or 15% to $3.5  million for the six
months  ended June 30, 2001 from $3.0  million for the same period in 2000.  The
increase  was the  result of annual  rent  escalations  in 2001 and the  Company
leasing  additional  facilities in 2000 to  accommodate  the  Company's  growth.
Although the Company  eliminated  small  unprofitable  call centers in 2000, the
majority of the cost savings associated with the reorganization of the Company's
operations were in salaries and benefits and other operating and  administrative
expense.

Other operating and administrative expense increased $0.6 million or 6% to $10.8
million for the six months  ended June 30, 2001 from $10.2  million for the same
period in 2000. The increase was primarily the result of additional professional
services fees incurred due to growth in the Company's business.

                                       11
<PAGE>

Depreciation  and  amortization  expense  increased  $0.3  million or 5% to $6.0
million for the six months  ended June 30, 2001 from $5.7 million for the period
ended June 30, 2000.  The increase was primarily the result of  depreciation  on
capital assets acquired in 2000 to support the Company's revenue growth.

Provision for employee severance and office closure.  The provision for employee
severance and office  closure was $0.5 million for the six months ended June 30,
2001,  compared to $1.3  million for the same period in 2000.  In the six months
ended June 30, 2001,  the Company  increased the provision for office closure by
$0.5  million as a result of  settling a dispute  related to an office  that was
previously  closed. In the six months ended June 30, 2000 the Company recorded a
provision  for  employee  severance  and  office  closure  of  $1.3  million  to
consolidate and reorganize its operations.

Other  unusual  charges.  In the first six months of 2001,  the  Company did not
incur any other  unusual  charges.  In the first six months  2000,  the  Company
incurred  $1.1  million  of other  unusual  charges  related  to  expanding  its
pre-chargeoff  services to provide more comprehensive  collection  solutions for
its clients.

Operating  Income.  Operating  income was $3.7  million for the six months ended
June 30, 2001, an increase of $3.5 million from operating income of $0.2 million
for the same period in 2000. This increase was primarily the result of increased
revenues,  elimination of small unprofitable  collection centers in 2000 and the
reorganization of certain operations in 2000.

Interest  Expense.  Interest  expense was $7.1  million for the six months ended
June 30, 2001  compared to $7.0 million for the same period in 2000, an increase
of $0.1 million. This increase was primarily the result of additional borrowings
against  the  revolving  credit  facility  and  interest  paid on capital  lease
obligations, partially offset by lower interest rates.

Net Loss. The Company incurred a net loss for the six months ended June 30, 2001
of $3.4  million  compared  to a net loss of $6.8  million in the same period of
2000, as a result of the factors explained above.

LIQUIDITY AND CAPITAL RESOURCES

Historically,  the Company's  primary sources of cash have been bank borrowings,
public debt offerings, cash flows from operations and capital infusions from the
Company's  investors.  Cash  has  been  primarily  used  for  repayment  of bank
borrowings, purchases of equipment, and working capital to support the Company's
growth.

Cash  Flows.  Cash used in  operating  activities  was $4.2  million for the six
months  ended June 30, 2001  compared to $1.2  million for the six months  ended
June 30,  2000,  resulting  in an  increase  in cash used of $3.0  million.  The
increase  in cash used  compared to the same  period in 2000 was  primarily  the
result of an increase in accounts receivable, which in turn was primarily due to
the timing of payments by the Company's clients.

Cash used in investing  activities was $2.5 million and $5.7 million for the six
months  ended June 30,  2001 and 2000,  respectively,  consisting  primarily  of
capital expenditures.

                                       12
<PAGE>

Cash provided by financing activities was $5.9 million and $13.8 million for the
six months  ended June 30,  2001 and 2000,  respectively.  The  decrease in cash
provided by financing activities in 2001 compared to 2000 was primarily due to a
decrease  in  additional   borrowings  on  the  revolving  credit  facility  and
additional payments made on the term loan and capital leases during 2001. In the
first half of 2001,  the Company  borrowed  an  additional  $2.0  million on the
Company's  revolving  credit  facility  compared to  borrowings  of $8.2 million
during the first half of 2000.

Working Capital. Working capital increased to $9.9 million at June 30, 2001 from
$3.6  million at December  31,  2000,  primarily as a result of the $4.8 million
increase in accounts  receivable  discussed above and a $2.2 million decrease in
accounts  payable  and other  accrued  liabilities.  Accounts  payable and other
accrued  liabilities  decreased by $2.2 million during 2001 primarily due to the
Company's ongoing efforts to curtail expenses and continued payments for accrued
severance and office closure.

Capital  Expenditures.  Capital  expenditures  for the six months ended June 30,
2001 were $2.5  million,  primarily  for  equipment to support the  expansion of
pre-chargeoff  services  to  a  major  telecommunications  company  as  well  as
investment in telecommunications and information systems technology. The Company
expects to limit  capital  spending to  approximately  $5.5 million for the year
ending December 31, 2001.

Liquidity.  The principal  sources of liquidity  for the Company's  business and
operating needs in the first half of 2001 were  internally  generated funds from
its operations, borrowings of $2.0 million against the revolving credit facility
("Revolving  Credit  Facility")  and a $5.0 million  capital  infusion  from the
Company's  shareholder.  On January 16, 2001, the Company  amended its Revolving
Credit  Facility  to  obtain  a new  overadvance  commitment  (the  "Overadvance
Facility") and a new customer  commitment (the "Customer  Facility").  Under the
Overadvance  Facility,  the Company can borrow $2.0 million at an interest  rate
equal to the Base Rate plus 3.75%. The facility expires on December 31, 2001 but
can be extended to January 28, 2004 if the eligible accounts  receivable balance
is greater  than $14.7  million.  Under the Customer  Facility,  the Company can
borrow  $2.0  million at an  interest  rate  equal to the Base Rate plus  3.75%.
Borrowings  under  the  Customer  Facility  must be used  to  make  payments  to
customers of the Company to cover the float in respect of checks  deposited into
one or more trust funds by debtors of such customers and can be outstanding  for
a maximum of 5 days. The Company is limited to two borrowings per calendar month
under the Customer Facility. The Customer Facility expires on December 31, 2001.
In  addition,  the Company is required to pay a  commitment  fee of .625% on the
unused portion of the Overadvance  Facility and Customer  Facility.  At June 30,
2001,  the  Company  had  $12.9  million  of  borrowings  outstanding  under the
Revolving  Credit  Facility.  Among other  restrictions,  the  Revolving  Credit
Facility, as amended,  requires the Company to maintain certain financial ratios
and limits the Company's ability to incur additional debt, pay dividends, and to
make acquisitions and capital expenditures. At June 30, 2001, the Company was in
compliance with all covenants, as amended on January 16, 2001.

The ability of the Company to meet its debt  service  obligations  and to comply
with the restrictive and financial  covenants  contained in the Company's senior
credit  facility,  the Revolving  Credit Facility and the Company's  outstanding
notes will be dependent on the future operating and financial performance of the
Company, which will be subject in part to a number of factors beyond the control
of the Company,  such as  prevailing  economic  conditions,  interest  rates and
demand for credit collection services.

Management  believes that, based on current levels of operations and anticipated
improvements  in operating  results,  cash flows from  operations and borrowings
available under the credit  facilities will be adequate to allow for anticipated
capital expenditures,  to fund working capital requirements and to make required
payments  of  principal  and  interest on its debt.  However,  if the Company is
unable to generate  sufficient cash flows from operations in the future,  it may

                                       13
<PAGE>

be necessary for the Company to refinance  all or a portion of its debt,  obtain
additional  financing or obtain  additional  equity  contribution  from existing
investors, but there can be no assurance that the Company will be able to effect
such refinancing or obtain additional financing on commercially reasonable terms
or at all.

INCOME TAXES

The Company has not recorded any tax benefit on its loss before income taxes for
the six  months  ended  June  30,  2001  due to the  uncertainty  regarding  the
realization of such benefits.

RECENT ACCOUNTING DEVELOPMENTS

In July 2001, the FASB issued Statements of Financial  Accounting  Standards No.
141 ("SFAS  No.  141),  Business  Combinations,  and No.  142  ("SFAS No.  142),
Goodwill and Other  Intangible  Assets.  SFAS No. 141 requires that the purchase
method of accounting be used for all business combinations  initiated after June
30, 2001 as well as all purchase  method business  combinations  completed after
June 30, 2001. SFAS No.142 will require that goodwill and intangible assets with
indefinite  useful  lives  no  longer  be  amortized,  but  instead  tested  for
impairment at least annually in accordance  with the provisions of SFAS No. 142.
SFAS No. 142 will also require that intangible assets with definite useful lives
be amortized over their  respective  estimated  useful lives to their  estimated
residual  values,  and reviewed for impairment in accordance  with SFAS No. 121,
Accounting for the Impairment of Long-Lived  Assets and for Long-Lived Assets to
Be Disposed Of.

The Company is required to adopt the provisions of SFAS No. 141 immediately, and
SFAS No. 142 effective January 1, 2002.  Goodwill and intangible assets acquired
in  business  combinations  completed  before  July 1, 2001 will  continue to be
amortized prior to the adoption of SFAS No. 142.

SFAS No. 141 will  require  upon  adoption  of SFAS No.  142,  that the  Company
evaluate its existing  intangible  assets and goodwill  that were  acquired in a
prior purchase business combination, and to make any necessary reclassifications
in order to conform with the new criteria in SFAS No. 141 for recognition  apart
from  goodwill.  Upon  adoption of SFAS No. 142, the Company will be required to
reassess the useful lives and residual values of all intangible  assets acquired
in purchase business  combinations,  and make any necessary  amortization period
adjustments  by the end of the first  interim  period after  adoption,  which is
March 31, 2002 for the Company.  In addition,  to the extent an intangible asset
is identified as having an indefinite  useful life, the Company will be required
to test the intangible asset for impairment in accordance with the provisions of
SFAS No. 142.

As of the date of adoption,  the Company expects to have unamortized goodwill in
the amount of $91,754 that will be subject to the transition  provisions of SFAS
No. 141 and 142.  Amortization expense related to goodwill was $3,528 and $1,764
for the year ended  December  31, 2000 and the six months  ended June 30,  2001,
respectively.  Because of the  extensive  effort  needed to comply with adopting
SFAS No. 141 and 142, it is not practicable to reasonably estimate the impact of
adopting these statements on the Company's  financial  statements at the date of
this  report,  including  whether  any  transitional  impairment  losses will be
required to be  recognized  as the  cumulative  effect of a change in accounting
principle.

FORWARD-LOOKING STATEMENTS

This Form  10-Q and other  communications,  as well as oral  statements  made by
representatives of the Company, may contain "forward-looking  statements" within
the  meaning of the  Private  Securities  Litigation  Reform Act of 1995.  These
statements  relate to,  among other  things,  the  Company's  outlook for future

                                       14
<PAGE>

periods,  market forces within the industry, cost reduction strategies and their
results,  planned capital  expenditures,  long-term objectives of management and
other  statements of  expectations  concerning  matters that are not  historical
facts.

Predictions of future results contain a measure of uncertainty and, accordingly,
actual  results could differ  materially  due to various  factors.  Factors that
could  change  forward-looking  statements  are,  among  others,  changes in the
general economy, changes in demand for the Company's services and/or cyclicality
in the  industries  to which the Company's  services are rendered,  governmental
regulations and other  unforeseen  circumstances.  A number of these factors are
discussed in this Form 10-Q and in the Company's  annual report on Form 10-K for
the year ended December 31, 2000.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

                                 Long Term Debt
                             Non-Traded Instruments
                               As of June 30, 2001
                          (Dollar amounts in thousands)
<TABLE>
<CAPTION>
                                                                                                               Fair
                                    2001      2002     2003       2004     2005     Thereafter     Total       Value
                                   -------- --------- -------- --------- --------- ------------ ---------- ----------
<S>                               <C>      <C>       <C>       <C>        <C>        <C>         <C>          <C>
Variable Rate:
    Term Loan Facility:            $  938   $  1,250  $ 1,200   $ 17,500    $ ---     $   ---     $ 20,888     $20,888
           $18.000 million           7.74%     7.74%    7.74%     7.74%     7.74%        7.74%
           $ 0.188 million           9.75%     9.75%    9.75%     9.75%     9.75%        9.75%
           $ 0.700 million          10.00%    10.00%   10.00%    10.00%    10.00%       10.00%
           $ 2.000 million           7.99%     7.99%    7.99%     7.99%     7.99%        7.99%

    Revolving Credit Facility:     $  ---   $   ---   $  ---    $ 12,940   $ ---      $   ---     $ 12,940     $12,940
           $ 0.800 million          10.50%    10.50%   10.50%    10.50%    10.50%       10.50%
           $ 9.000 million           7.49%     7.49%    7.49%     7.49%     7.49%        7.49%
           $ 3.140 million           9.50%     9.50%    9.50%     9.50%     9.50%        9.50%

Fixed Rate:
    Senior Notes due 2008:         $  ---   $   ---   $  ---    $  ---     $ ---      $100,000    $100,000     $31,000
    $100 million @ 10.25%                                                               10.25%

    Security Agreements            $   21   $    46   $  ---   $   ---     $ ---      $   ---     $     67     $    67
                                    22.50%    22.50%
</TABLE>

The Company's  primary risk exposure in the normal course of business is that of
interest rate risk. There have been no material changes in this type of exposure
since December 31, 2000.

                                       15
<PAGE>

Part II.  OTHER INFORMATION

ITEM 5.  Other Information

In June 2001,  the Company was notified  that one of its  significant  customers
would not be renewing its contract for pre-chargeoff  services from the Company.
The  Company   understands  that  the  customer  has  internalized  its  account
receivable  management  functions,  which are the  services the Company had been
performing  for the customer under this  contract.  In 2000,  revenues from this
contract represented approximately nine percent of the Company's revenues. Since
the  non-renewal  of this contract,  the Company has  experienced an increase in
other  business from that customer and has added new customer  relationships  to
the Company's  sources of revenue.  Therefore,  at this time, the Company cannot
predict  whether or to what extent the  non-renewal of this contract will have a
material  adverse  effect on the  Company's  financial  condition and results of
operations in future reporting periods.

ITEM 6.  Exhibits and Reports on Form 8-K

   (a)   Exhibits:

          99       Reconciliation of Net Loss to Adjusted EBITDA

   (b)   Reports on Form 8-K:

          During the quarter ended June 30, 2001, the Company filed no reports
          on Form 8-K.

                                       16
<PAGE>

                                   SIGNATURES

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
Registrant,  has duly  caused  this  report to be  signed  on its  behalf by the
undersigned, thereunto duly authorized.

                             NATIONWIDE CREDIT, INC.
                                  (Registrant)

                              By: /s/ Michael Lord
                   -------------------------------------------
                                  Michael Lord
                           Co-Chief Executive Officer

                                 /s/ Eric R. Dey
                  --------------------------------------------
                                   Eric R. Dey
                             Chief Financial Officer


August 14, 2001
---------------
(Date)
                                       17
<PAGE>