There is a provision of the bankruptcy law that allows Mississippi homeowners to eliminate second mortgages. Not widely known, this section of the bankruptcy code is becoming increasingly popular to bring the mortgage debt closer to the real value of the home.
Bankruptcy law prevents a homeowner from getting rid of the first mortgage if they want to keep the home, but the rules don’t apply to second mortgages. The second mortgage can be stripped off (canceled) if there is no equity to cover the debt, which is the case for thousands of Mississippi homes that are worth a lot less now.
The law has been in effect for years, but during the housing boom houses were worth much more and there was not much occasion to use it. This is only available in Chapter 13 bankruptcy.