What will happen to bank loans in the event of hyper inflation? Say for example a person gets a home loan of $100,000 in a certain country at an interest rate of 10%. Inflation is normally around 5% in this country.

What could happen to that person's loan if the country's inflation rises to say 1000%?
If the loan is indexed to inflation, "nothing" would happen. The remaining loan payments would simply increase.

If the loan is not indexed to inflation, when inflation occurs, the debtor's wage would most likely increase with the inflation rate. Hence, he would very quickly have the money (in nominal terms) required to pay back the debt (which is now less worth, in real terms). 

Consider the loan $L$ in monetary terms, and denote the price level by $P$. The lender was expecting $L/P$ when he formulated $L$. Now, instead, he is getting $L/P_2$ in real terms, which is (for the much larger price level $P_2$) a much smaller real value.

Which leads us to the conclusion that in this case (and very often), higher inflation is a redistribution from lenders to debtors.