To the best of my knowledge, people are required to pay their debts. It’s a myth that anyone can apply for bankruptcy on a whim and be released from their debts.
I did a little research and discovered that there are several types of bankruptcy in the US, but the most common types that are available to individuals are Chapter 7 and Chapter 11.
The most common type available to individuals is Chapter 11 where the court sets a payment schedule for you to pay back your debts. Chapter 11 does not free you from your debts. You do have to pay back all your debts, just per a schedule that you can afford.
The second most common type available to individuals is Chapter 7 where you are ordered by the court to sell off all your assets (except for a few “exempt” items, such as the clothes on your back) to apply to your debts. The rest of your debts after that are forgiven by the court. However, this form of bankruptcy has always been very difficult to be granted. Furthermore, on 20-April-2005, US President Bush enacted the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 into law, making it even more difficult to be granted this form of bankruptcy.
As for solving the current debt crisis, I guess that depends on whether you’re a moralist or a pragmatist. If you’re a moralist, you’re gonna say that everybody ought to pay their debts; period, end of discussion. If you’re a pragmatist, you’re gonna say that it does the greatest good for the greatest numbers if people are forgiven their debts (at least partially) and not put out on the street; we saw the government bail out big corporations and the wealthy, so why then is it such a sin for the wealthy to extend the same favor to the people?
Which side is right? Well, that’s why we live in a democracy…