Can I strip an unsecured second mortgage from my home in a chapter 7 bankruptcy?

No.  In fact, the U.S. Supreme Court has emphatically said, “No!” just today.

bk strip mortgage

In Bank of America v. Caulkett, the Supreme Court held that

A debtor in a chapter 7 proceeding may not void a junior mortgage lien under 506(d) when the debt owed on a senior mortgage lien exceeds the current value of the collateral if the creditor’s claim is both secured by a lien and allowed under 502 of the Bankruptcy Code.

In a chapter 13 case, it IS possible to strip a second mortgage if it is wholly unsecured.  This Calukett decision just clarified a line of cases led by Dewsnup v. Timm, 502 U.S. 410 (1992) which also held that you cannnot strip  second mortgage under 506(d).

Basically, there had been a hope that since you can strip a second mortgage in a chapter 13, some attorneys thought that it should be possible to strip that same mortgage from your property in a chapter 7.  This is not possible.

It works like this:  your home is worth $200,000, you owe $201,000 on your first mortgage and $15,000 on your second mortgage.  SInce you owe more than the value of the home with that first mortgage, you can remove the second mortgage from the property in a chapter 13 and treat it as an unsecured claim, same as a credit card or medical bill.  However, you cannot remove the lien from your home in a chapter 7.  It stays secured against your home.