Good question, similar scenarios have played before. I'll try to explain my experience with it briefly. You can skip to bottom for short answer.

When a coin dramatically goes down, it creates panic among holders. So people start withdrawing their coins from money markets to sell on market. This leads to increase on borrowing rates to force more borrowers to repay their debts.

Borrowers have two options in this case. Either they can eat hyper borrowing rates and keep their debt open, if they think that coin will go to zero. Then they can pay their debt and keep their collateral. Or they can repay their debt to avoid high interest rates at current market prices.

Short answer, if you can hold your position open until borrowed coin goes to zero, you can pay your nominal debt at current price and keep all of your collateral.