Stripping off 2nd mortgage if charged off for 3 yrs

I would have to show that the FMV of the property is less than the $115k you owe to the first mortgagee in order to 'strip off' the second mortgage. Just b/c the county assessed the property at $124k doesn'st necessarily mean thats the correct FMV. You should hire a licensed appraiser to determine the FMV. You will need this appraisal for the adversary proceeding against the 2nd mortgagee anyway. Even if the appraisor appraises the property at less than $115K, the holder of the 2nd mortgage still has the opportunity to contest the appraisal and argue that its worth more than $115k.

The phrase "charge off" is a technical term in the collection industry that refers to how long a debt has been unpaid. It doesn't mean you don't owe the debt, as many people believe. Most bankruptcy courts require a formal appraisal to do a lien strip in a Chatpter 13 and depending on whether your income is considered above median or below median, you might pay for 5 years (above median) or for 3 years (below median). You may also wish to consider whether you could negotiate a settlement of your 2nd mortgage without bankruptcy, although you would have to scrounge around for some cash to do this. Whether this might be a good idea or not would depend on how much other debt you have & how much you would have to pay in a Chapter 13 to complete the Plan. Good luck!

In Utah, I have stripped second mortgages based only on a property tax notice value but only if it is less than the amount owed on the first mortgage. So, if you are able to get an appraisal or even a comparative market analysis (CMA) from a realtor, I would be willing to use that as an argument that the second mortgage is wholly unsecured. In my experience, the mortgage companies will request an appraisal if they do not agree. If the appraisal comes in lower than what is owed to the first mortgage, then they will not object to the lien strip.