Many people who are considering bankruptcy have already tried and failed at consolidations, loans, and other methods of paying off their debt. Bankruptcy seems like only option. Most of those who need to file bankruptcy can’t even afford to pay off minimum balances on their credit cards, home payments and even car payments. Whatever has gotten them to this place of being bankrupt doesn’t even matter. The fight to get out of debt is what leads them to bankruptcy court.

As such, secured home loans often offer better interest rates than unsecured loans, but offer higher risk to borrower, as defaulting on these loans can have greater consequences, such as fines, or even possible repossession of home originally put up as secured collateral (subject to amount of loan, of course).

As interest rates for secured home loans are usually significantly lower than unsecured loans, more of monthly payment goes towards paying off capital, rather than paying accrued interest.

The monthly payments are often more flexible in secured loans, affording borrower more leeway in working out a payment plan that fits his or her needs. However, care must be taken not to use this as justification for taking out such a loan, as it is a financial contract between lender and borrower.