A lot of people seem to feel that filing bankruptcy is a moral failing and for this reason many people who would benefit from bankruptcy foolishly refuse to take advantage of it. This also explains why anti-bankruptcy laws favored by lending institutions have recently been able to get through Congress.
Bankruptcy is best compared to auto insurance. You can purchase insurance that will pay for damages to your car and yourself even if the accident was your fault. Few people would have moral issues with collecting on this insurance money, because they paid in advance for a comprehensive policy.
Now imagine that, when applying for a loan, you are given two options. The first option has a lower interest rate. The second option offers a higher interest rate, but the loan has a clause that states that, in case you get into economic trouble and are unable to pay the loan, the loan will be forever forgiven. When framed this way, I doubt that people would have moral issues with avoiding payment of the loan, because they paid extra for this loan insurance.
In essence, Congress has determined that the first type of loan is illegal, and all loans by default include this loan insurance. This insurance is calculated into the interest rate that lenders charge. The banks and the credit card companies make money despite the fact that a certain percentage of loans are lost to bankruptcy. There is no need to feel sorry for them. People who are eligible for bankruptcy should have no moral issues with taking advantage of it, they already paid for the insurance.
Now some would say that people should be given the freedom to enter into the first type of loan and thereby lower their interest rate. The problem here is that some people would foolishly enter into loans that they have no business getting involved with, and unscrupulous lenders would take advantage of such individuals. Bankruptcy laws create a moral check on the activities of lenders. Society is better off if people are given a fresh start rather than be forced into an unproductive life of quasi-indentured servitude.