People like credit. The threat of losing it is more than enough reason to avoid bankruptcy.
More than likely though, it won’t come to bankruptcy. After not paying your credit card for awhile, you can usually negotiate a lower rate.
There are all kind of ways to get around bad credit - co-signers, putting things in your spouses name, etc.
You can also buy a house three years after a foreclosure with a government backed low interest FHA loan with only 3 percent down payment.
I did a “strategic default” on two mortgages and had a short sale. I had an unofficial “pre-pre approval” for a mortgage 34 months afterwards and started the process of getting a house built. 36 months to the day, they started the loan process for an FHA mortgage.
It’s really easy to get a secured loan. I also got a great interest rate on a car loan during those three years. I couldn’t get unsecured credit to save my life though.
No I don't think you can ever completely recover from bankruptcy. I'm often asked on applications for things 'have you ever been bankrupt'. It is a permanent matter of public record that you are a bankrupt.
That seems like a better situation then permanently ruining someone's credit score, which seems like it's regressive and stops people getting out of the situation because it's harder to get back on track.
This seems like a step backward not forward to me.