Being bankrupt is not fun. It is hard to find a lender or financial institution that is prepared to take the risk of lending to a bankrupt person. However if there is property offered as security you stand a better chance of obtaining a home equity loan. There are two types of these loans, one is called Home Equity Loan while the other is termed Home Equity Line of Credit (HELOC).

When you apply for the bankruptcy equity home loan, the property offered as security is valued and a sum equivalent to the value of the house is granted as the loan which amounts to a substantial sum of money which will be paid at once and the debtor agrees to repay in installments over a period of ten to fifteen years. The interest on this type of loan is very low and the rate is fixed for the entire period it is lent and will not be changed no matter what happens on the market. This money is best suited to pay off any outstanding debts that charge high rates of interest and the balance is recommended to be utilized in a secure investment that will in time increase your credit rating. Loan installments should be paid up in time and the entire loan settled within the stipulated time frame to avoid possible foreclosure in the event of default.

The HELOC loan is based on a different system. A value is set as the loan against the property offered as security. Interest is charged only on the value utilized and not on the whole loan somewhat similar to a credit card. Therefore you only pay interest on what you used and can opt to repay the entire amount used as well. This will be advantageous in the renewal of the loan. The rate of interest becomes variable in this manner whereas with the other loan scheme the interest is fixed.

If your house has been mortgaged you can refinance it and obtain a fresh loan. Here the first mortgage is nullified and a fresh mortgage is drawn up where a substantial amount of money is granted from which the balance of the first mortgage is taken out. The interest on this however is a much higher rate as the lender is at greater risk.

These loan schemes are available to you if you are the owner of a property which you can offer as collateral against the loan. Although you are able to increase your credit worthiness with any of these home equity loan after bankruptcy schemes, have in mind that if in the event of default on your part in repaying within the stated time frame you run the risk of losing your property in the process.