They’re predicting 1,457,787.3 bankruptcy filings for 2011. While I am impressed by the accuracy, I still don’t know what 0.3 of a bankruptcy case looks like.

This projection comes from bankruptcy case data from 2006 through 2010, government reports on credit card debt, consumer loans, and the unemployment rate, and come courtesy of Professor Robert M. Lawless, a law professor specializing in bankruptcy at the University of Illinois at Urbana-Champaign.

The interesting part here is not the specific number of bankruptcies predicted, as the number will almost surely be off by some amount. The important part is the trend. Bankruptcies are expected to decline slightly in 2011, anywhere between 5 and 10 percent. A declining bankruptcy rate is not surprising given that unemployment is also expected to decline (at least according to some sources) and there are some signs that access to consumer credit is easing slightly (meaning consumers will be able to borrow more easily to avoid bankruptcy if cash flow is tight). Perhaps most significantly, however, consumers have piled up less debt in the past three years meaning there is less debt to discharge and fewer incentives to file bankruptcy.

What does all this mean? Falling bankruptcy rates are not bad news, but they are also not a sure sign of an improving economy. Filing for bankruptcy is a legal process with many benefits and consequences. Not everyone who is in financial trouble will benefit from filing. For instance, people with no income or no assets to protect will not benefit from the protection bankruptcy can provide. And, because bankruptcy wipes out debts, it does not help households who are having trouble making ends meet but have not yet piled up the massive debts bankruptcy would wipe out.

If you are a Michigan resident and want to find out if bankruptcy is right for you , please contact me at [email protected] or (248) 246-6536 to schedule a free, initial consultation.