If you imagine a continuum from no bankruptcy possible at all, to infinite bankruptcy available at the click of a button - you end up with the realization that the only loans and credit extended would be backed by assets.

If you could declare bankruptcy (Hey. I just wanted you to know that you can't just say the word "bankruptcy" and expect anything to happen.) the moment your credit card bill arrived, no bank would extend you credit beyond what you specifically had on deposit with them to secure it (just like home mortgages are secured by the home).