I forgot my local backup password to unlock the iPhone backup file

Try using your iTunes password that you use to log into the iTunes store worked for me, after iTunes decided that my backup was encrypted even though I didn't select it.

THIS WORKED FOR ME IN LIMITED MANNER.

I ran into same problem. After trying (pretty much) all the options from the posts/blogs on the internet, I realized that phone was basically into factory settings after upgrading from 4.3.3 to 5.1.1 straight. What I actually did eventually that I pressed 'cancel' button after it asked me for password again. Then I went to my iPhone 4 and started going thru setup. After 'enabling location services' and setting up 'wifi', it asked me whether I wanted to:

• Restore from 'iCloud'
• 'Set up as new phone'
• Restore from backup on iTunes

I chose "restore from iTunes backup". My phone was already connected to my windows PC and iTunes was turned on. It automatically started restoring. At this time, it just restored the Apps. which took I hope this works for people having same problem.

It stills asks for password which I do not know, when I try to restore from iTunes.

After several unsuccessful attempts, I typed in my date of birth in the form of ddmmyy and it worked! I took my time as I gathered from several posts on the internet that I needed a lot of patience to recall from memory all the possible passwords I might have used a long time ago.

I wrote down a long list of all the possible passwords I tend to use, some of them begin with capital letters. I then crossed them out as I tried them out without any luck until I hit gold with my d.o.b. Good luck and remember that this is a password that you set up yourself, somewhere inside your head, the correct password lay asleep!

• Set aside time
• Get a pen/pencil
• Get a piece of paper
• List down all the possible passwords you use / have used in the past (don't forget if you have used capital letters or numbers or have mixed them up, write down all the possible combinations)
• Enter the passwords - one at a time, crossing out any incorrect one
• Have patience
• Have a lot more patience
• You're the only one who knows the answer!
• Good luck!