Thousands of Utahans rang in 2010 searching for a sense of optimism. Whether they were in the middle of Salt Lake’s EVE Celebration or reveling in St. George’s Town Square Plaza, the U.S. economy had recently given Utah several reasons for optimism – after all, the holiday season brought shoppers back to the mall and the Dow Jones Industrial Average closed the year up 19%. But despite the festivities brought on by January 1st, one challenge looms large on the horizon for Utah households and companies – consumer debt.

According to the U.S. Federal Reserve, both mortgage and consumer credit card delinquency have increased in the third quarter of 2009 in 20 of Utah’s 29 counties. Notably, Uintah, Washington, and Wasatch counties led the increase in mortgage delinquencies, while Uintah, Kane and Grand led the way in consumer credit card delinquency. Mortgage delinquency is defined as those consumers with mortgages that are 90 days or more past due. Consumer credit card delinquency is defined as consumers with at least one active account that is 60 days or more past due.

These state-wide trends do not bode well for a state already infamous for its high bankruptcy rate. In 2009, Utah ranked fourth in the U.S. in the increase of bankruptcy filings per capita, with over 12,000 Chapter 7 and 13 filings, according Bankruptcy Statistics, a firm that collects and aggregates bankruptcy data. This increase means that Utah’s already high bankruptcy rate increased 57% over its monthly average in 2009 through October.

The consumer debt problem is not only plaguing Utah but is continuing to cause problems for the U.S.’s largest financial services firms. The Wall Street Journal reports that delinquency rates for consumer credit cards continue to rise. Capital One reported that charge-offs rose to 9.6% in November, while Discover Card, Bank of America and Citigroup – which constitute the nation’s largest credit card issuers – all reported charge-offs between 9% and 13%. According to Moody’s Investor Services, the consumer credit card charge-off rate could go as high as 12-13% by the middle of 2010, as consumers crawl out of a holiday shopping season that, while economically uplifting in the short-term, could lead to buyer’s remorse for borrowers and lenders by the time credit card bills are deemed uncollectable.

However, there is good news. Consumers are expected to continue to increase in frugality, changing their shopping habits by shopping less and by choosing the premium brands less in favor of lower-priced generics, all part of the "new normal" that some say has descended on the U.S. economy. And with this new found frugality, the U.S. Federal Reserve does anticipate that household financial obligations as a percentage of income will continue to drop. However, it is dropping from historically high levels, with financial obligations going from nearly 19% of personal income to below 18% of personal income.

Because household financial obligations have a lot farther to go to ease the burden on Utah households, the Utah delinquency and bankruptcy rate should continue to be a significant problem, making 2010 a make it or break it year for Utah families. 2010 could be the year in which Utah’s household economic fortunes turnaround with a rebound in employment and the ability to service these historically high debt burdens, or 2010 could be the year in which more households are forced to clean their financial house through the legal assistance of Chapter 7 or Chapter 13 bankruptcy.