WhileChapter 13 bankruptcy has many advantages over other bankruptcy types, there is one fact that many consumers aren't aware of: it is possible to have your second mortgage discharged.

If they are successful debtors could have their second mortgage, or junior lien, discharged (or "stripped") so long as their house is appraised for a value that is less than the cost of the first mortgage. If that is the case then the debtor can petition the court to have the junior lien dismissed.

 Once the judge has been shown that the value of the home is less than the first mortgage then the junior lien will be converted to unsecured creditors. The primary reason behind this action is that the cost of the home simply doesn't warrant the second mortgage taken out on it. This second lien will be removed forever as long as the debtor is successful in following their repayment plan, along with any other debts held by unsecured creditors. 

Have questions about Chapter 13?  If so, contact us to speak with a Houston bankruptcy lawyer.