Either allow the government to turn down most of these loans and charge higher interest rates based on credit-worthiness or make bankruptcy very difficult. What you want is the bankrupcty rights of a non-government guaranteed loan in which credit worthiness is taken into account, but interest rates and credit availability of a loan in which the bankruptcy rights are substantially reduced.

That's not possible. I agree we should abolish these lending guarantees entirely and let the private sector provide loans and charge whatever interest rate they want if people can just walk away from the loan. But that's not the interest rate people are paying now, so that's not an option for existing borrowers.