Well loans, I'm right there with you. Get 5x 1% loans through your burghers and you can easily invest the money into buildings that'll pay off the loan before its due or sustain your army long enough to get an extra 10-20 warscore for reparations. Bankruptcy however is something I've only ever seen as viable for the opening moves of a desperate OPM. Massive moral penalties keep you from winning battles with even rebels, you lose 100 mana per a type on top of whatever you couldn't spend before hitting the button, no manpower regeneration, -3 stab, 0 legitimacy, downgrade all trade centers, a well as a number of other lesser penalties and negative events for 5 years.
It won't kill you if you plan for it, but loan abuse only works if you wait 5 years after your last building finishes before bankruptcy, so 10 years that could have just as easily been spent using loans for mercs or armies to plunder national treasuries around you in between conquest seems a lot more efficient to me than stopping all wars for 5 years and burning a bunch of mana for gold.
