Chapter 13: Stripping Away Second Mortgage

I occasionally get valuable tips from other bankruptcy attorneys who read this blog. Ben Stolz, Esq. recently referred me to this article about stripping away unsecured second mortgages in Chapter 13 bankruptcy cases. Link: Second and Third Mortgages Mean You Have No Equity? The Benefits of a Chapter 13 Filing! : Bankruptcy Law Network.

The article, written by a bankruptcy attorney,  discusses bankruptcy tool for people with first and second mortgages who want to use Chapter 13 bankruptcy to save their homes from foreclosure. When there is sufficient value in the property to justify keeping the first mortgage, but not also a second mortgage, the author says that the debtors can strip away the second mortgage while keeping the first mortgage intact. The debtors have to proof to the bankruptcy judge that the current value of the property is not greater than the first mortgage balance.