Can we remove (strip) a 2nd mortgage on our home in bankruptcy if the available equity is less than the exempt amount under Utah law?

Yes, but only in a chapter 13.

To make this very clear, you can strip a judgment lien from a home in a chapter 7, but you cannot strip a second mortgage from a home in a chapter 7.  You can only do this in a chapter 13.  house

In a chapter 13 you can file a motion to determine secured status of lien of (bank) pursuant to 506(a) of the bankruptcy code.  In this motion, you simply argue that the first mortgage is larger than the value of the home, and that you want to remove the second mortgage and make it an unsecured debt.

So let’s say that your home is worth $100,000, and you have a first mortgage for $101,000 and a second mortgage for $25,000.  The first mortgage is larger than the home value, which means that the second mortgage can be stripped, or turned into unsecured debt.

But what if your home is worth $101,001?  Then there is single dollar securing the entire $25,000 second mortgage, and the entire $25,000 remains secured and must be paid back to the bank.

What if you try to strip the second mortgage, but the bank comes back with an appraisal higher than the value of the first mortgage?  Then you’ll probably lose unless you’re willing to get some appraisals and then pay the appraisers to come into court and testify against the bank’s appraiser in an evidentiary hearing, hoping that your appraisal wins.  However, in my experience I have found that the bank seldom fights the motion, and you can usually strip the second mortgage.

Just remember that you must stay in the chapter 13 until completion to verify that the second mortgage remains an unsecured debt that you can discharge in the bankruptcy.

This is not legal advice.  If you need help, go to


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