A lender who makes an unsecured or insufficiently-secured loan to a person who makes no attempt to pay interest or return the principal, and has exhausted all m

A lender who makes an unsecured or insufficiently-secured loan to a person who makes no attempt to pay interest or return the principal, and has exhausted all means to collect on the debt, is indeed worse off than if he had kept the loaned amount in a risk-free asset (unless, perhaps, there is some compensating tax advantage, though I wouldn't know anything about that, and it seems unlikely that such opportunities would be widely available.)