Susan survives the encounter. She is later seen in a traumatized state, and her children are taken into protective custody. T-Bag’s decision not to kill Susan is a critical character moment. For T-Bag, death is a release. Killing Susan would have ended her suffering. Instead, he chooses a fate he considers worse: forcing her to live with the memory of his violation, the guilt of "betraying" him (in his view), and the constant fear that he might return. It is an act of prolonged psychological torture, not mercy.
In a fit of rage, T-Bag pulls Susan into a closet and, off-screen, (implied by the context and his dialogue). Afterward, he does not kill her. He leaves her alive but utterly broken. His exact words as he leaves are chilling: "I just wanted what was coming to me. Now you got what's coming to you." does tbag kill susan
Furthermore, killing her would have immediately triggered a massive manhunt, reducing his chances of escaping with the money. His primary goal remains survival and freedom. Susan Hollander appears again in Season 4 (Episode 16: "The Sunshine State"). Susan survives the encounter