Is it possible to limit bitcoin wallet balance? I'm not sure if this is a right question, but is it possible to create  bitcoin wallet address with specific amount of limit?
No that's not possible.

Therefor a transaction must be declinable if the limit is reached, but:

You can not decline a transaction to your address (even if you are a miner and you decline it, someone else could mine it). If one of your friends creates a transaction, if it's a valid transaction and if a miner includes it into a valid block, it's done.