Removing Second Mortgages

Many people are saddled with multiple mortgages that exceed the value of their houses. This is called being “upside down” on your house. The value of your home can be determined through an appraisal by a licensed real estate appraiser or by looking at the value as appraised for property tax purposes. Property tax appraisals tend to be lower than the appraised value of the house.

Chapter 13 bankruptcy has several advantages over Chapter 7 bankruptcy such as the right to avoid or “remove” a second or third trust deed if you are upside down on your house. Before bankruptcy, all mortgages on your house are treated as secured claims in which each mortgage lender can foreclose on your property when you miss payments. But if you are upside down on your house and filing for Chapter 13 bankruptcy, you can ask the court to use a lien strip to remove junior mortgages.

How Does Chapter 13 Affect Your Mortgage?

When you file for Chapter 13 bankruptcy, all collection activities are immediately stayed, including your mortgage payments. The second or third mortgage liens are not automatically removed. You must file and have the Court approve your request. First, you must get your plan approved. Next, you must complete your planned payments and get a bankruptcy discharge. If you fail to complete the plan or the case is dismissed, the second mortgage lien is not stripped and all the original payments you owed resume as usual. This is due to the fact that the right to avoid (“lien strip”) your junior mortgage is contingent upon the completion of your Chapter 13. Nevertheless, this is a very small price to pay in return for the right to eliminate a mortgage.

Like a first mortgage, a second or third mortgage is a secured debt, with the house as collateral. However, if your first mortgage balance is more than the value of your home, a Chapter 13 bankruptcy may help you remove a second (or third) mortgage through the process of lien stripping.

Lien-stripping means the court will convert the value of those mortgages that exceed the value of the house and order the creditor to remove that lien or liens. The lien is converted to an unsecured debt similar to credit card debt or medical bills. Once the Chapter 13 is completed, the lien is no longer valid as a lien, and must be removed from title to your home. This means that when the home is sold, the former second mortgage does not need to be paid anything.

Process of Removing a Second or Third Mortgage

If your house is not worth more than your first mortgage, but is worth more than your first and second mortgages combined, you can strip your third mortgage. For example, assume that your house is worth $500,000 and you have a $550,000 first mortgage and a $100,000 second mortgage and a $50,000 third mortgage. Because your first mortgage is more than the value of your home, the second and third mortgages can both be stripped. However, suppose your house is worth $600,000, which is more than your first mortgage, but less than $650,000 (your combined first and second mortgages). In that case, you may strip only the third mortgage. Whichever liens are stripped are converted to non-priority unsecured debt.

You don’t have to make payments on non-priority unsecured debt apart from your debt repayment plan. You pay off a portion of unsecured debt to your trustee regularly through the plan over a period of three to five years. If you complete the plan, making all your payments, the court will issue an order removing the second (or third) mortgage lien from your home so that you only have one mortgage to pay off after the Chapter 13 process is over.

The process of removing a junior mortgage in connection with a Chapter 13 bankruptcy can get complicated. Contact experienced Los Angeles bankruptcy attorney Devin Sawdayi at 310-475-9399 or via our online form for a free consultation and help removing a second or third mortgage.



Having been referred to you by my cousin, I wish to thank you for the extremely seamless handling of my Bankruptcy. You answered all my questions professionally and I really appreciate the understanding and care taken with my case. I would definitely refer you to anyone asking me for a good bankruptcy lawyer. 

– G.Epstein



I just want to thank you for the great job that you did helping me get my life back together! I’m not sure what I would have done had I not been given your contact! Not only did you make it possible for me to start fresh but you took care of all the details! And if that wasn’t enough you followed up with me when I needed your help after the fact. Please feel free to post this message as I never miss a chance to say what a great job you have done and are still doing! Thanks Devin for helping me start over! 

– Patricia Scanlan

10866 Wilshire Blvd. #890

Los Angeles, CA 90024

Toll Free: 800.474.6050Phone: 310.475.9399

We are a debt relief agency. We help people file for bankruptcy and have been proudly doing so since 1997.
We serve the following localities: Los Angeles County including Bell Gardens, Beverly Hills, Burbank, Carson, Compton, Culver City, East Los Angeles, El Segundo, Encino, Gardena, Hawthorne, Huntington Park, Lawndale, Los Angeles, Marina del Rey, Playa del Rey, Reseda, San Fernando, Santa Monica, Studio City, Tarzana, Van Nuys, Venice, and Woodland Hills.


Devin Sawdayi | Los Angeles Bankruptcy Lawyer Devin Sawdayi