In a Chapter 13 bankruptcy, you must get an accurate appraisal of the value of your house if you intend to wipe out the second mortgage in your bankruptcy. Not only must you get an appraisal that shows that your house is worth less than what you owe on your first mortgage, but you also must get that same appraiser to testify for you in court. Many appraisers will charge up to $400 for the appraisal and another $400 to spend the day with you in court to testify.
In most Chapter 13 bankruptcy cases, the appraisal is all in you need to wipe out the second lien on your house because many second mortgage holders won’t bother to challenge the action to wipe it out in the bankruptcy. My guess is that the reason some mortgage holders don’t bother to fight the Chapter 13 bankruptcy is that they know that the debtor must actually complete the entire bankruptcy case in order to successfully wipe out the lien.
However, in some Chapter 13 bankruptcy cases, the second holder will fight back. Credit Unions seem most likely to ignore the reality of depressed real estate values in Georgia and will do everything they can to keep their lien on the house from getting treated unsecured in the Chapter 13 bankruptcy case. Credit Unions almost never have trouble finding some real estate appraiser to support their argument that the house in question is worth more than what is owed on the first mortgage.
In some cases, the appraiser for the second holder will list houses that are substantially more expensive than the house in question to try to justify a higher price. In the trial, its up the debtor and her appraiser to point out the differences between the houses that the second holder uses in their appraisal and houses that are truly comparable to the house in question.