You can still declare bankruptcy when you don't have the collateral for your car/house loan anymore, though. For example, if your car was totaled, or your house burned down.
Yes but what you are describing is essentially unsecured debt. The government is guaranteeing your loans, why do you think student loan rates are so much cheaper than credit cards?
The price you pay for that guarantee is that you can't declare bankruptcy. The government is propping up this industry and it has some parallels to the US housing before 08 (encouraging lending to subprime homebuyers)
