5. Suppose Pirate doesn't pay back anything.
6. Pirate now has 150,000 + 25,000 + 150,000 = 325,000 BTC.
7. Pirate has technically defaulted, but he also has a *lot* more money than in your scenario.

In your scenario, Pirate winds up with about 50,000 BTC. In mine, he winds up with 325,000 BTC. Plus, my numbers are more realistic than yours. It's definitely in Pirate's interest to sell Pirate obligations.