To avoid repaying a US bank loan, individuals may pursue legal avenues such as bankruptcy, debt negotiation, or seeking loan modifications. Bankruptcy, particularly Chapter 7 or Chapter 13, allows discharge of certain unsecured debts under strict eligibility criteria. Debt settlement involves negotiating with lenders to repay a reduced amount, often through third-party services. Loan modifications adjust terms like interest rates or repayment periods to ease financial burdens.

Bankruptcy is the most structured method. Chapter 7 discharges most unsecured debts, including credit cards and medical bills, but excludes student loans, tax debts, and secured loans. Chapter 13 requires a repayment plan over 3–5 years, which may discharge remaining debts after completion. In 2022, 747,415 bankruptcy filings occurred, with 70% of Chapter 7 cases resulting in full discharge (American Bankruptcy Institute). However, student loans remain dischargeable in only 1% of cases (U.S. Bankruptcy Court). Debt negotiation success rates vary; 30–40% of consumers achieve settlements, but outcomes depend on creditworthiness and lender willingness. The IRS treats settled debt as taxable income, potentially increasing liability. Defaulting risks collections, wage garnishment, and permanent credit damage, as 25% of defaults lead to lawsuits (Federal Reserve, 2021).

Avoiding repayment often requires proactive legal or financial strategies. Bankruptcy offers a clear path but excludes many loans, while negotiation carries tax and credit risks. Defaulting is ill-advised due to long-term consequences. Data underscores the importance of consulting professionals to navigate complex regulations and maximize outcomes.