Bankruptcy happens, and so do tough circumstances, but it seems intuitive to me that there's a pretty high correlation between bankruptcy and personal responsibility.
Making up statistics for the sake of argument, if 90% of the bankruptcies are due to personal responsibility, then a potential employer is only going to have a 1 false negative out of every 10 potential hires. That's not a bad hit rate.
It sucks for the 10% who took a calculated risk on, say, a business or investment, and lost out. But that's life.
And it's not just hiring, it's loan underwriting and all the other pain points of having been through bankruptcy. Not 100% guaranteed weed-out factor, but pretty good as weed-out factors go. It's a kind of game.. what should my strategy be to minimize work and maximize results?
As a sidebar on the topic of hiring, the same goes for things like job experience. A super learner who works hard is far more valuable as an employee (in general) than a non-diligent person with experience in a given field. However, if you're doing a request for resumes on Craigslist, are you likely to find the super learner who works hard? No, so you filter on job experience (how would you even ask for the super learning?). You may weed out good candidates, but you'll also weed out a whole lot of bad candidates.
Incidentally, this is one major reason why hiring is so broken. But that's another topic altogether.