That only makes the costs even worse, especially ethically. They're sapping the most money from people least able to defend themselves from their preying.
The ones who really catch it in the shorts are people who have never been unable to pay off an obligation before: their credit and hard-earned reputations are probably ruined (the first for however long a bankruptcy takes to go off the books, the second possibly forever), their day-to-day lives will become a gigantic burden since a bankruptcy will demolish any accumulated wealth/assets, and that's not even considering what it will do to their self-image for them to feel like they aren't living up to their personal standard.
Just so we're clear: I think this system is terrible, and desperately hope that something is done to fix it. I'm not sure what the right fix is, but I hope somebody out there finds it.