How do debts get cut in half?
That did not happen for my grandmother. When her bank closed her money in the bank was just gone. However, her loan was sold to another bank and she still owed the full amount.
When nobody can pay their debts, in a depression, creditors will cut debts where they have to just to get something back.
Her original bank sold the loan at a discount, I can assure you, just so the original could get something back.
https://en.wikipedia.org/wiki/Debt_deflation