An interesting article from the Silicon Valley Mercury News on people using the bankruptcy code to strip-off completely underwater second mortgages. The author of the article seems to think this is a chapter 13 thing, but what I think it is using Dewsnup v. Timm to strip off completely underwater second mortgages. Dewsnup left unresolved the question of whether a completely underwater second mortgage should be considered an allowed secured claim with a value of zero (and so still a valid lien under Dewsnup) or simply not an allowed secured claim. If it is treated as the former then this might provide some relief for underwater homeowners with second mortgages without needing a cramdown power. My understanding is that the majority rule seems to be that followed in California–namely that it is not an allowed secured claim at all. Although I could be wrong about that.