If a problem gambler wants to they can register with the casino's not to allow them to gamble. Why can't we do the same for credit?
For example, in the case of the OP, the bank could have stated we will give you this mortgage consolidating up your past debts if you register for the voluntary credit limiting program. That way the debtor could not go credit seeking. Time limits could be set up, such as the term of the current mortgage. Limits could be set. Requirements of credit counseling or taking courses before further credit being granted.
The way it works now is the person has to screw up to lose access to credit. Wouldn't it be better if we could turn that around?