Broadly speaking, bankruptcy is a legal system enabling individuals and entities to discharge or restructure their debts in an orderly, centralized proceeding. In the United States, bankruptcy has historically been, and remains, the subject of lively debate. This debate centers around the collision between two fundamental, opposing ideals.

First, a debt is an important obligation, both legally and morally, which shouldn't lightly be cast aside. Second, society benefits from, and indeed,...