Or are they smart
Pocket house payment until foreclosure happens, pocket car payment until repo happens. Take all that money, rent apartment, buy garbage car cash, rinse and repeat in a few years when another lender decides to issue you a new loan, lol.
Sure, it's not necessarily the glamorous life, but depending on the payment amounts, filing chapter 13 on everything while pocketing the cash every month could be a financially smart move in the end. For the credit cards or whatever that you couldn't file on, you can settle out of collections for a much smaller balance than you racked up (and didn't pay on), pay that cash from all the other payments you skipped on and actually be "debt free"
Just kidding, you're right. This financial system sucks lol.