How can one be financially devastated by unsecured debt?

Yes, you can choose not to deal with the credit system ever again, but this privilege evaporates if you need to rent a house, own a house via mortgage, lease a car, or own a car via loan.

If you don't have the cash then you have substantially worse options.

If you do have the cash then you will be fine. You can also pay off your old creditors to get even better options.

Even if you do have the cash and merely want to rent a place to live, many landlords will turn you away and you wind up in less desirable neighborhoods which are often correlated to poverty and crime.

Your assets can be seized anyway

The main difference between secured and unsecured debt is that secured debt has a simplified priority claim on the specific assets. However, unsecured debt still has a claim on all your assets - it's just that collecting them is more involved and may require a court judgement. For small debts, the lender might choose not to spend too much effort, at least initially - a few calls from a debt collector are cheaper than going to court. However, if they consider that the effort is worth it, they can sue you for debt collection and get a civil judgement with a lien on your property, your bank accounts and garnish part of your wages, even if you don't respond to collectors calls and don't want to get credit ever again.

The main difference between losing your assets in a bankruptcy and losing your assets this way is that bankruptcy erases the remainder of unpaid debt. If you simply have your assets seized, but that's not sufficient to repay the debt, then you still owe them money that can be seized from your future paychecks over a long time.

In addition to the possibility that you may be forced to pay the debt (plus substantial court fees) whether you want to or not, there are also jobs which you'll be disqualified from if your credit history is terrible. It makes you vulnerable to bribes and temptations to steal/embezzle. Definitely kiss goodbye any sort of security clearance.

It's easy to say "oh I don't care to get more debt, so my credit history doesn't matter", but your credit history is used for lots of things. Some phone plans will run credit checks (since you can charge stuff to your phone bill). Some insurance companies charge you higher rates if your credit history is bad. You might even have trouble with relationships because getting married to someone with a lot of debt is a big gamble. And, of course, if you die with any assets left, they'll go to pay off your debt (along with hefty fees and interest) instead of your heirs.

It's possible to get around all these things and run out the statute of limitations, but it'll likely make your life a lot more difficult.

Potentially, you could (eventually) face jail time.

If you live in a state that allows it, when you fail to follow a court's order to appear for a hearing or make a payment, then you may be held in civil contempt of court. If you are in contempt because you failed to follow an order, the court can issue a warrant for your arrest. Once arrested, you go to jail and remain there until you post a bond. Interestingly, the bond is set in an amount that just so happens to equal the amount of the judgment that he creditor took against you.

Technically, this does not amount to a debtor's prison because you are going to jail not for failing to pay the debt, but for failing to follow a court order. However, for the debtor, the end result is the same.

the-new-bill-collector-tactic-jail-time

The main difference between secured debt and unsecured debt is that the ones with secured debt come first. The other difference is that it is slightly harder to make you pay unsecured debt, but not much. In the end, you’ll have to pay your debt.

And if you consider that you somehow can get away with not paying: if you owed me £10,000 and I was sufficiently annoyed, I’d find someone who calls himself “debt collector” and buys the debt off me for £3,000. And who would make you pay (if you value your health).