system
Given the following post, respond as if you're commenting on Reddit:
human
ELI5:What happens if you never repay your loans?
gpt
There are two types of loans: secured, and unsecured.

A secured loan is a loan for an object that has value, like a house or a car. If you stop making your car payments, the lender takes back the car. Legally, when you took out the loan to buy your car you gave them the right to do that.

An unsecured loan is just cash, there's no specific object. An example of that would be credit card debt. If you fail to pay your loan, they can try to collect the money, if it's a lot - by getting a court order to garnish your wages or take money directly from your bank account. But if the amount isn't worth it, they'll just ruin your credit rating, making it impossible for you to get any future loans for the next ~7 years.

If you didn't actually commit fraud, then you won't go to jail. Failing to pay back a loan is civil, not criminal, and there are no debtor's prisons.

If you owe so much money that there's no way you could ever pay it back, you can declare bankruptcy. The way this works is that the court takes your remaining money, divides it among everyone you owe, then declares all loans paid off. You start over from scratch. You're left with items you need to survive like a car and a basic apartment, but if they're extravagant you may be forced to sell those and get something more modest.

Fun fact: prior to the Affordable Care Act (Obamacare), the #1 cause of personal bankruptcy was medical bills. Obamacare may not be perfect, but it definitely helped this situation a lot - far fewer people are bankrupted by medical bills today.