MenuIn many respects, second mortgages are treated the same as first mortgages in bankruptcy. The most important difference is that an unsecured second mortgage can be stripped off the property, when more debt is owed on the first mortgage than the property is worth.
Strip Off
A strip-off in bankruptcy is the removal of a lien on property due the associated loan being unsecured, i.e. that other more senior liens are for more than the property is worth. Strip-offs are routinely applied to underwater second and third mortgages in chapter 13 bankruptcy.
