The declaration of bankruptcy under Chapter 7 discharges the bankrupt person from honouring all debts. But under Chapter 13 it is not so. The debts are required to be paid within a fixed time frame and it is done under court supervision.A bankrupt person under Chapter 13 bankruptcy can obtain a bankruptcy equity home loan even though he may not be an ideal client for a lender. A sub-prime lender will refinance your home with a substantial amount where it would normally be difficult to have access to a mortgage in a conventional manner. Those who have bad credit ratings benefit from large amounts of money in the form of loans from these sub-prime lenders who are mostly interested in the property rather than the bad credit, although they may require to know your capacity to repay. The lender charges a high rate of interest on these loans as his service is also charged for.Another option is the home equity loan scheme. This is a low interest loan spread over a period of two to fifteen years. The rate of interest is fixed and will not change during the entire loan period even though economic changes may cause interest rates to fluctuate. The property is valued and a substantial amount is granted which is equivalent to the vale of the house. This is an ideal loan scheme to rebuild credit worthiness provided you are mindful of the importance of repaying the loan in a timely manner and thereby averting foreclosure and subsequent loss of property.There are other loan options that a bankrupt person can make use of. One such type is the home equity line of credit. This is designed on the same lines as a credit card. The lender places a value on the property offered and credit to that value is offered to the borrower much like a credit card. The interest on this type of loan is variable and the borrower pays only for what has been utilized and no more. The borrower can also pay back what has been used and then the loan gets renewed. The time frame to settle all balances is set from about 5 to 25 years. This is a very flexible system as it allows you to pay just the interest when you are unable to pay very much.Even though bankrupt people will not have access to the usual loans, they have the opportunity of securing their homes and exploring the possibility of obtaining a loan under the bankruptcy equity home loan scheme. These are mostly low interest rate loans and will help you re-establish your credit worthiness. However it is advisable to treat this loan with caution and make sure that all loan installments are repaid on time to avoid losing your home.
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