Hacker News Reader

Bankruptcy is a consumer protection. It gives people buried in debt an out, and it also discourages the banking system from making predatory loans.

I can’t think of any alternatives that accomplish both of these things.

So there's this term called "Moral Risk". It means if there's no consequence for one's financial actions, then a person is likely going to do it over and over again.

Bankruptcy is one form of this. Corporate and bank bailouts are another form.

I'm not going to go into the politics and history like debtor's prisons, but to be honest, bankruptcy is not a cakewalk either.

Suppose someone invests all of their savings into a restaurant that flops and they end up to their eyeballs in debt and declare bankruptcy. What did the government do wrong?

Bankruptcy protects the citizens. In fact it should be simpler to go bankrupt and come back.