UPDATE 1-Asset Acceptance Q2 profit lags Street

* Q2 EPS $0.03 vs est $0.13

* Cash collections fall 8 pct

July 30 (Reuters) - Asset Acceptance Capital Corp (AACC.O), which buys distressed consumer debt, posted a lower-than-expected quarterly profit, as cash collections dropped and it took an impairment charge.

For the second quarter, the company earned $0.8 million, or 3 cents a share, compared with $2.1 million, or 7 cents a share, a year ago.

Analysts on average were expecting earnings of 13 cents a share, excluding items, according to Reuters Estimates.

Quarterly cash collections fell 8 percent to $87.3 million and the company recorded a net impairment charge of $6.8 million.

During the quarter, the company invested $20 million to purchase charged-off consumer debt portfolios with a face value of $727.9 million.

"As unemployment continues to increase we are seeing a negative impact on our liquidation rates, especially in the older vintages where there is decreased collection leverage due to the age of the accounts," Chief Executive Rion Needs said in a statement.

Shares of the company closed at $8.43 Wednesday on Nasdaq. (Reporting by Sakthi Prasad in Bangalore; Editing by Ratul Ray Chaudhuri)