2010 recorded 1.5 million bankruptcies. Signs of improvement for this year are not overly promising.

Last year will be known for a number of things. Most of us will probably remember it as the year America attempted liftoff from the great recession but failed. That failure was not due to any one thing or person but more the result of a vastly complex economy that few people, even those put in place to do so, truly understand.

The previous 12 months saw 1.5 million Americans exercise the benefits of the United States Bankruptcy Code. With so few jobs available and a home sales market marred by a nasty, ongoing mortgage management and foreclosure scandal, our most popular refuges of financial security were inhabitable. The end of the tunnel as no light. The tunnel, more accurately, appears to have no end.

We are, as it were, existing in a new financial environment characterized by fear, induced when our feeling hands come across a break in the wall. Do we move forward with this car purchase? Should the small business owner hire? Can community banks loan money? We don’t know. The dark corner holds too much risk. There could be financial monsters just ahead of us. It’s best, our economy is proving, to sit tight. Maybe something will shine on us soon.

Bleak analogies aside, bankruptcy is helping a lot of people cope with the uncertainty. The number of people who filed is nine percent greater than it was in 2009. That many people haven’t filed since 2005, when the Bankruptcy Abuse Prevention and Consumer Protection Act went into effect. That year, around 2 million filed. The laws being enacted then were going to make it much more challenging for consumers to seek protection. It was a law largely written by and for the financial industry.

There is hope that 2011 will bring an end to the annual increase in personal bankruptcy filings. But that could be a tall task. Just after the 2005 spike there was a substantial decline the next year. However, the rate has steadily increased every year since. And since there is no massive bankruptcy reform coming to entice filers, we may see only a slight blip downward. If trends continue, we may be back at the 2 million number before 2013.

Fueling hope in a decline is the slow rate of borrowing over the last two years. The credit markets have tightened greatly and credit card use is way down. Mortgages are much harder to get and in general, people are relying more on cash.

Nevertheless, banks across the country have started to once again heavily market credit cards, identifying new consumer markets amongst the demographics still above water. Accounts are being offered based on a customer’s potential for default, which stems from data accumulated during the recession. Banks now know what type of card, rates and incentives to offer those who always pay off their balances, those who occasionally forget and those who simply don’t care about paying them back.

So this year may see the economic darkness fade a bit. After all, given 2010, is there much choice? Let’s hope so.

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