Personally, I'm not a big fan of telling someone what is right and wrong for them in their life. That would be me taking the place of the Holy Spirit in their lives especially when dealing with areas that are more gray. But, I have had times where I did not manage money in a Godly fashion. I have made mistakes, gotten myself into debt and had problems paying people back. I don't believe God wants us to live in slavery to a lender.
But a couple scriptures comes to mind...
Psalm 37:21 The wicked borrow and do not repay, but the righteous give generously
Do not be a man who strikes hands in pledge or puts up security for debts; if you lack the means to pay, your very bed will be snatched from under you.
I think it's pretty clear that if we borrow money, that we are making a promise of repayment. By failing to repay, we are breaking a promise that leads to theft.
With that said, there is another side to this coin. There are those wealthy institutions that will take advantage of a desperate person, or someone down on their luck. And the Bible is clear about that kind of behavior as well.
You shall not have in your bag differing weights, a large and a small. You shall not have in your house
differing measures, a large and a small. You shall have a full and just weight; you shall have a full and just measure, that your days may be prolonged in the land which the LORD your God gives you.
You shall not oppress your neighbor, nor rob him. The wages of a hired man are not to remain with you all night until morning.
I think each person needs to ask themselves some very tough questions when it comes to bankrupcy. It is certainly a legal way to relieve oneself of debt. But, I don't believe it to be optimum. However, there are desperate cases where I see no other way.
What we ARE called to do is learn from our mistakes with money. We are called to be lenders, not borrowers.
For the Lord your God will bless you as He has promised you, and you will lend to many nations, but you will not borrow; and you will rule over many nations, but they will not rule over you.
The rich rules over the poor, and the borrower becomes the lender's slave.
Money managment has been an area God has really been working on in my life. I want to be completely debt free and to stay that way. Being a slave to lenders is no way to live. It hinders our ability to give freely, and to walk freely.