Can a second mortgage be considered unsecured when filing chapter 13 bankruptcy?

Filing for Chapter 13 bankruptcy allows you to keep your assets such as your home, car and jewelry. If you have a first and second mortgage on your home, you may be able to have your second mortgage considered unsecured debt if the value of your home is equal to or less than the amount you owe on your first mortgage. Under Chapter 13 bankruptcy, the process is called lien stripping. For instance, if you owe $500,000 on your first mortgage and $100,000 on your second mortgage, but your home is only worth $400,000, you can file a lien stripping motion with the bankruptcy court asking the court to strip the 2nd mortgage. If the court approves your removal of your second mortgage, then your 2nd mortgage will be treated as unsecured debt in your Chapter 13 bankruptcy. During a Chapter 13, you enter into a reduced debt court-approved repayment plan with your creditors. Most plans are for 3-5 years. After the plan has been completed, any remaining unsecured debt will be discharged by the court, and your bankruptcy will be officially discharged.  

If you are contemplating filing bankruptcy, you should speak with a bankruptcy attorney to find out all your options. Bankruptcy laws are very complicated. The attorney can advise you whether you will be able to have your 2nd mortgage considered unsecured and answer your other questions. The attorney is an expert at state and federal bankruptcy laws. Your attorney can prepare the petition for bankruptcy, assist you with negotiations with your creditors and represent you in bankruptcy court.