In medieval Italy, when a businessman did not pay his debts, it was the practice to destroy his trading bench. From the Italian word for broken bench, “banca rotta,” comes the term bankruptcy. (Source: BankruptcyData.com.)

Bankruptcy costs the average U.S. family $500 a year through higher consumer prices. (Source: National Retail Federation press release: “Retailers: Attach Bankruptcy Reform to Ag Bill,” Jan. 28, 2004.)

The dollar value of accounts discharged in personal bankruptcy in 2004 is estimated at $40 billion. (Source: Testimony of Todd J. Zywicki to the Senate Judiciary Committee, Feb. 10, 2005.)

Consumers rushed to the courts in record numbers to file bankruptcy before the deadline of the new bankruptcy law, enacted to lessen abuse of the bankruptcy system. In the three-month period immediately preceding the new law, more than 500,000 cases were filed?an increase of 36 percent from the same period the year before. (Source: American Bankruptcy Institute press release, “Bankruptcy Filings Set Record on Eve of New Law,” Dec. 15, 2005.)

The number of personal bankruptcies filed each year has tripled since 1986. (Source: American Bankruptcy Institute, Annual Business and Non-business Filings by Year, 1980-2004.)

The number of consumer bankruptcy filings over the past decade equates to one in every seven U.S. households. (Source: American Bankruptcy Institute, U.S. Census Bureau figures.)

Consumer bankruptcies represented 98 percent of all bankruptcy filings in recent years. (Source: American Bankruptcy Institute, Annual Business and Non-business Filings by Year, 1980-2004.)

WorldCom Inc. is the largest business to file bankruptcy, with over $103 billion in pre-bankruptcy assets. Enron Corporation was the second largest, with over $63 billion in pre-bankruptcy assets. (Source: BankruptcyData.com.)

Kmart Corp. is the biggest U.S. retailer to declare bankruptcy, according to data going back to 1980, with total pre-bankruptcy assets of more than $17 billion. (Source: BankruptcyAction.com.)

Bankruptcy stays on an individual’s credit report for seven to 10 years, depending on the type of bankruptcy filed. Obtaining credit after a bankruptcy can be difficult and expensive. (Source: CBM Credit Education Foundation Inc.)

Alimony, child support and most taxes are not dischargeable and will still be owed after bankruptcy. (Source: American Financial Services Association.)

The $2.3 billion recovered by third-party collection agencies on purchased accounts in 2005 represented 19 percent of total receipts in the industry. (Source: Value of Third-Party Debt Collection to the U.S. Economy: Survey and Analysis, PricewaterhouseCoopers, June 2006.)

Over $110 billion in face value of debt was purchased in the United States in 2005. The global debt buying market was estimated at $158 billion. (Source: “Welcome to a New World of Debt,” Collections & Credit Risk, pg. 26, Vol. 11, No. 5, May 2006.)

The vast majority of purchased debt has been charged-off credit card receivables, accounting for 90 percent of the face value of debt purchased in 2005. But as the debt purchasing market matures, it is increasingly common for companies such as telecommunications providers, hospitals, physician groups and other businesses to sell their nonperforming accounts. (Source: “Welcome to a New World of Debt,” Collections & Credit Risk, pg. 26, Vol. 11, No. 5, May 2006.)

Asset buyers are considered “debt collectors” under the definition established in the Fair Debt Collection Practices Act (FDCPA), the primary federal law regulating third-party collection agencies. The FDCPA, enacted in 1977 with the support of ACA, is designed to help protect consumers from unfair and abusive collection practices. (Source: “Federal and State Law Issues for Debt Purchasers,” ACA International FastFax Document.)

State law determines how long a debt is legally enforceable. An “out-of-statute” or “time-barred” debt is one the holder may no longer recover by suing in court. The length of the statute varies by state, generally ranging from three years to 10. The debt does not go away after a statute has expired, and (except in Wisconsin and Mississippi) the law allows a collector to request payment on a time-barred debt. (Source: “Time-Barred Debts,” Federal Trade Commission Consumer Alert, October 2004.)