C. Petry

American consumers filed 801,840 bankruptcy petitions in 2007, a 40% increase from the 573,203 cases filed in 2006, according to the American Bankruptcy Institute. Filings had plummeted shortly after a new bankruptcy law went into effect in October 2005.

When creditors need help collecting on delinquent receivables, many will resort to litigation. But suing is not the option in all cases.

More collection agencies lacking sufficient cash are turning to the debt-resale market to pick up accounts on which to collect. Too small to buy portfolios directly from major credit card issuers, these organizations are looking to the secondary debt market where portfolios are resold in smaller chunks that are more affordable.

Card delinquencies and charge-offs are expected to rise this year to levels seen before the October 2005 changes in federal bankruptcy law. This does not necessarily mean there will be lower debt prices as a result, however.