Debt buyer Collection House has entered into a standstill agreement with its lenders, Commonwealth Bank and Westpac, while it attempts to recapitalise the business.Collection House announced on Thursday that the lenders have agreed to support the progress of the company's operational strategic review and recapitalisation.Changes to the company's collection practices have affected the accounting value of its purchased debt ledger assets by deferring or reducing collection cashflows. This, in turn, is having an adverse impact on the company's ability to meet the current terms and conditions of its lending arrangements.The lenders have agreed not to take any action during the standstill period, which runs until September 30, "in relation to any potential or existing defaults that occurred under the facilities prior to the commencement of the standstill period".The company, which is being advised by Flagstaff Partners, Deloitte and Clayton Utz,is still working with its auditor to finalise its December half financial report, which will take into account the impact of changes to its collection strategy on the carrying value of its purchased debt ledger assets.Trading in the company's shares has been suspended since February 18.The company's problems go back to August last year, when a report by Financial Counselling Australia, Consumer Action Law Centre and Financial Rights Legal Centre identified the Collection House subsidiary Lion Finance as the debt collection agency with the highest number of court applications to put debtors into bankruptcy.Lion made 512 applications in the 2018/19 financial year. Only the ATO made more bankruptcy petitions.The report said: "A few debt collectors are regularly and persistently making people bankrupt. This is clearly a deliberate policy decision. Such a decision is inconsistent with a best practice approach to working with people in financial hardship."Using bankruptcy as an enforcement mechanism is particularly problematic for people on low incomes who own their homes. It is poor public policy when people become homeless over relatively small debts."In November, Collection House responded by announcing that it had increased the threshold at which it will consider recovery by bankruptcy, moving from the regulatory limit of $5000 to $20,000.Then in March, the company announced that it was moving to what it called a more "customer focused" approach it its business, in response to demands from clients and consumer groups that it change its punitive approach to dealing with debtors.It said it was considering "how it might further respond to the continuing development and evolution of its operating environment" and that it was undertaking a review of its operating model and collection strategies.It said industry developments, "including changes expected of us by the vendors of purchased debt ledgers and the wider community extend beyond legal and regulatory compliance requirements, and Collection House aims to follow best practice."These planned changes will have an impact on the valuation of its assets, given changes to the assumptions that underly the level and timing of collection cashflows that are expected to be generated from its purchased debt ledger assets."The company has identified that adopting some of the operational changes currently