Final answer:
Bankruptcy primarily harms a person's credit report, making them a higher risk to lenders and consequently, it becomes difficult to obtain loans or leads to less favorable loan terms.
Step-by-step explanation:
Bankruptcy makes it difficult to obtain loans primarily because b. it harms a person's credit report. When an individual declares bankruptcy, it indicates to lenders that there was a failure to repay debts, which makes banks wary of providing additional financing. This consequence can affect an individual's ability to obtain future loans, as a credit report reflects their creditworthiness and reliability. The impact on credit can last several years, making it challenging to qualify for mortgages, car loans, or personal loans.
Harm to credit reports can influence not only loan approvals but also the terms of loans, potentially leading to higher interest rates for debtors who are deemed higher-risk. Moreover, the substantial economic impacts of banking systems underline the importance of a robust credit system for the economy, as illustrated by the loan scarcities experienced during financial stress, such as the 2008-2009 Great Recession.