In determining your ability to strip off a junior mortgage, you must look at the superior liens, the amounts owing on those debts, and the value of your house.
Bankruptcy is about debts. Different categories of debts are treated differently. The categories are secured, priority and general unsecured.
Filing bankruptcy stops creditors' collections against you immediately. But sometimes a creditor tries to get permission to collect anyway.
The laws about the treatment of different types of creditors can often be used in your favor to pay who you want or need to pay.
Statutory liens survive bankruptcy. Chapter 7 may still be able to help in various ways and be your best solution.
To keep possession of your property that is collateral on a secured debt, you need to give the creditor "adequate protection."
Here's a scenario showing how Chapter 13 solves problems that Chapter 7 doesn't solve in dealing with a creditor's disputed lien.
Chapter 13 gives you powerful ways to hold onto a vehicle, but it also lets you give up that vehicle without paying its debt.
For a debt to be secured, the creditor has to go through the right legal steps. Otherwise you don't have to pay the debt.
A secured debt effectively turns into an unsecured debt if you surrender the collateral, which may make sense to do more than you think.
A secured debt can be handled like an unsecured debt if you surrender the collateral, "avoid" a judgment lien, or just keep the collateral.
Because of Chapter 13's much more powerful automatic stay, its ability to prevent judgment liens and tax liens is extremely valuable.
Creditors with secured debts often have much more leverage against you than with unsecured debts.
Chapter 13 is often a better way to get sell real estate, especially if you have other financial complications.
Bankruptcy cannot remove contractor's liens or other statutory liens from your home, but both Chapter 7 and 13 can help you deal with them.