Token values can go to zero as the issuer is deemed unlikely to pay, due to death or reputation damage or unfortunate accident. I don't think you have to deal with those contingencies because of they don't pay it off they will find it more difficult to issue new tokens in the future. That's the free market.

Maybe there is a contract that collateralises the token in some way, like "I'll pay it off with labour if I can't pay it with bitcoin" or "this token is issued to build an extension on my house, and if I don't buy it back by a certain date the owner of the town owns a portion of the land under my house, which they'll get back on sale on the land".

You'd need the existing system to enforce these contracts, but they are just contracts, they don't have to be smart.

The difference is that tokenisation systems can be built on more or less decentralised self-regulating blockchains like Bitcoin or Solana, meaning issuance is just a matter of software. If they are not collateralised by more than your reputation (and many won't be, I can buy a new Mac today on credit without collateralising the loan) then you don't additional legal agreements.

Of course legal agreements can be boiler plate or generated on the fly without paying lawyers, so software can help people add more sophisticated collateral agreements, one would assume there would be legal experts in the background helping to create the boiler plate and informing how the contracts are generated.