You're right but there is a lot of predatory lending. Should people even be able to get a $20K limit on a credit card? How many could ever reasonably pay that off? What about payday loans, etc.?
The problem that I see here is that I was never forced to prove my ability to pay my debt, and the limit isn't raised and lowered to match my current circumstances.
I agree that someone who couldn't reasonably recover from $20k in debt shouldn't be given the opportunity to accrue that much. It doesn't do anyone any good, aside from the leeches that make things harder for people in trouble, while purporting to help. I'd like to not be hamstrung by someone else's difficulties, though.
Not that we should not touch predatory lending. But so much of our economy is built on advertising and stuff, just shutting off the loan tap will not fix the problem.
By then they end up with a hefty amount of debt and their lifestyle preferences are ratcheted up; they don't want to downgrade from their BMW to a Honda, move to a less fancy neighborhood and start cooking more meals at home. They are more inclined to keep scraping by with their luxuries, overburdened by debt service.
Happy to be proven otherwise...