The reason people are held hostage to credit card debt is that a) they don't declare bankruptcy, and b) frequent bankruptcy is priced in to the interest rates,

The reason people are held hostage to credit card debt is that a) they don't declare bankruptcy, and b) frequent bankruptcy is priced in to the interest rates, which are therefore crazy high. If the bank is owed $1 million, half of that is never repaid due to bankruptcy, and the other half is repaid over three years at 30% annual interest, the bank breaks even or makes a small profit. But if you're in the half that repays at 30%, you're screwed pretty hard.