In a previous post, I discussed when a homeowner can “strip off” (remove) from a home a lien secured by a second mortgage in Chapter 13 bankruptcy. See Stripping Off Home Mortgages: An Introduction.

The debtor can only strip off the second mortgage if the property’s current value does not cover any amount of the second mortgage (or HELOC). The homeowner must provide evidence of the home’s value, especially if the lender opposes the lien strip off. In order to get the ball rolling, the homeowner may present an appraisal that was done for some other purpose (for example, to get a loan), the opinion of a local real estate broker, or a current property tax assessment.

Evidence of Property Value

However, ideally, the debtor should get more persuasive evidence before proposing the Chapter 13 plan or making a motion to strip the lien. Such evidence usually comes in the form of a recent appraisal. When you get the appraisal, make sure the appraiser will be willing to testify in court in support of his or her opinion, in case it comes to that.

Date of Appraisal

Courts differ as to what valuation date applies to mortgage lien strip offs. Some courts use the date of filing; others use the effective date of the Chapter 13 plan. Find out which valuation date your court uses, and then make sure the appraiser values your home as of that date.