There is an easier way. It is possible to shift balance of protection to the borrower. As an absurd example: allow borrower to deny his loan. The troubles with too big loans will end instantly, because lenders will think not just twice, but thrice and even ten times.
This absurd way is absurd, but lawmakers could make it gentlier in a reasonable way. Give a consumer more protection, shift more risks unto lender's side and viola, you need not to pay fees for a legal help, while system works much more reliable, because lender would pay from his own pocket for a stupid loan. Borrower mistanderstood terms of a loan and couldn't pay? So lets write off 90% of his debt, let him pay remaining 10%. Who is the dumb one now? Not the borrower who couldn't understand the terms of the loan, but a lender who hadn't bothered to make terms to be crystal clear to the borrower.
I'm not sure does it counts as a govermental regulation, I believe not, because government needs to tweak system a bit, and then system would regulate itself. In any case it is the easiest way. But lenders do not agree of course.
This absurd way is absurd, but lawmakers could make it gentlier in a reasonable way. Give a consumer more protection, shift more risks unto lender's side and viola, you need not to pay fees for a legal help, while system works much more reliable, because lender would pay from his own pocket for a stupid loan. Borrower mistanderstood terms of a loan and couldn't pay? So lets write off 90% of his debt, let him pay remaining 10%. Who is the dumb one now? Not the borrower who couldn't understand the terms of the loan, but a lender who hadn't bothered to make terms to be crystal clear to the borrower.
I'm not sure does it counts as a govermental regulation, I believe not, because government needs to tweak system a bit, and then system would regulate itself. In any case it is the easiest way. But lenders do not agree of course.