First: because interest compounds geometrically, it's a mathematical inevitability that loans become unpayable. This occurs since the loan obligation never stops increasing, while the real economy that provides repayment, tends to level out. This is so mathematically inevitable that Albert Einstein answered "What is the most powerful force in the universe?" with "compound interest."
The authority on jubilees is Michael Hudson, whose recent book "...and forgive them their debts" tells the (ancient) history of jubilees in some detail. (The link on Hudson's name is to something shorter on that subject.) There is some controversy about whether jubilees were implemented, but only because archaeological economists would deliberately mis-translate the cuneiform rather than admit jubilees occurred.
Hudson, who read the original documents, says ancient civilizations really implemented jubilees, starting in Babylon. He focuses on the meaning of the title of his book in economic terms, not in terms of behavior. Biblical scholars I've heard say a more accurate translation is "debts" rather than "trespasses"...so maybe he has a point.
In any case, the ancient Babylonians knew about the inevitability of unpayable debts...before the Jews. Apparently, the Jubilee was something the Jews brought back from the Babylonian exile. Babylonian rulers' traditionally declared a Jubilee when they took over from their predecessor. This gained them a load of goodwill, and prevented their population becoming debt slaves, who could not be warriors, so it also helped their kingdom's common defense. Jubilees were a bit easier than they would be in modern times since most debts were owed to the temple/palace complex rather than the private sector. Present-day student loans are analogous, even though the Senator from MBNA (Joe Biden) voted to make them impossible to extinguish, even in bankruptcy.
Hudson says that Jesus' first sermon, in which he announced this was the "year of our Lord" (reading Isaiah) was a declaration that it was time to forgive debts--and forgiveness of economic debts, not just sinful behavior or thoughts, was central to his ministry. The Romans opposed Jesus' system of forgiveness, and had no bankruptcy, much less a regular jubilee or other such accommodation for the inevitably unpayable debts. The Pharisees colluded with the Romans. Read Matthew 23 to see how Jesus felt about Pharisees.
Hudson, who read the original documents, says ancient civilizations really implemented jubilees, starting in Babylon.
Hudson says Pharisee Rabbi Hillel was trying to rewrite IOU contracts so that they were exempt from the traditional jubilee. The money changers in the temple were intimately involved in this cycle of grinding the debtors for every last nickel, too--hence an uncharacteristically angry Jesus' overturning their tables.
The question from Babylon to the present is: What does one do with the unpayable loans? For the Romans, as for the "Furnishing Man" in the post-Civil War South, the debtors become slaves or debt peons. The Federal Reserve reports 40% of the current U.S. population can't handle a $400 emergency without borrowing or selling something...so debt peonage is still with us.
Jubilees aren't always ancient, either. The victorious allies in World War II granted debt jubilees to the German and Japanese populations, and thereby laid the foundation of their "miraculous" economic recoveries. Oddly enough, they did not grant such a jubilee to the Vietnamese, who were part of the allied opposition to the Japanese in Southeast Asia.
Before World War II , Ho Chi Minh, and the Viet Minh fought to cast off the shackles of indebtedness to French colonials and their local oligarchy--successfully too, until the World War interrupted. In reneging on its treaty obligations to hold a plebiscite to unite Vietnam, the U.S. tried to reinstall the French colonial debt peonage the Vietnamese fought so hard to overcome. That's one of the principal motivations for the Vietnamese to fight so hard against a much-richer-and-better-armed U.S. (See War Comes to Long An by Jeffrey Race...a guy who learned Vietnamese on the boat over, then interviewed the population rather than huddling in a "strategic hamlet" ...to see what actually motivated them.)
While you're considering matters financial, you might also take a look at Corruption in America, and what is at stake by Sarah Chayes for a look at how legitimate are the debts the global north's former colonial powers continue to try to collect (or, alternatively, Tom Perkins' Confessions of an Economic Hit Man). In Debt: The First 5,000 Years, David Graeber tells the story of how the French invaded Madagascar, and told the natives they were indebted (for their lives)...then proceeded to collect. Same story in now-impoverished Haiti.
Graeber said Western banks prescribed austerity (the IMF published a staff paper saying that didn't work, but ignored it), even for loans in present day Madagascar. Because of such austerity, the government ended its mosquito eradication program. 10,000 natives died of malaria so that the former colony could pay a loan whose loss the bank could have easily borne.
I've also read recently that between $1 - 2 trillion still, to this day, makes its way from the former colonies to their former colonial masters. The World Bank, IMF and a host of NGOs enable this. Heck, in a tribute to cluelessness the Methodists' "Social Principles" still prescribe "balanced budgets" and spending restraint (austerity). For a fuller explanation, read this.
One point Chayes makes that really resonated for me: The Muslim Middle Easterners aren't that enamored of religious fanaticism. It's the corruption of the Karzai government the U.S. installed that drives the population into the arms of the Taliban, not the population's affinity for Islamic extremism.
It's Simpler Than It Looks