How is "equity" on a home calculated for BK (1st & 2nd mortgage involved)

[JJCA]

While reading an article on the internet about home equity & BK..it seemed to imply that having a second mortgage give you less equity to protect in BK. I think I am just reading/understanding it wrong, so have a question:

I owe $183,000 on my first mortgage (from 2003) & $87,000 (from 2008) on my second. For this questions sake, lets say my home is worth $320,000. Do I deduct BOTH the 1st & 2nd mortgages to find the equity, or does the 2nd one not count? The more I read, the more it seems like the '2nd mortgage' is 'not secured' and therefor does not count to reduce equity value of the house.

I am in CA if it makes a difference.

THANKS!!
JJ

[newbie2]

The 2nd mortgage is secured since the total of the 2 mortgages is less than the value of the home. The equity is the difference between the value of the home and the total of outstanding mortgages. In your numbers above, you owe $270,000 and the value is $320,000. Your equity would then be $50,000.

[AtlBkAtty]

If the collateral for obtaining the second mortgage was your home (and assuming the bank did everything correctly to ensure its lien), then both outstanding mortgage amounts are deducted from the fair market value to determine your equity.

[JJCA]

Thank You both. By chance do you know how 'cost to sell' is factored in? From a trustee standpoint (versus a Realtor commission etc standpoint)

[daylate]

I read somewhere that YOU don't figure it in, but a trustee needs to because all he/she is concerned with is how much is left for the creditors. So your equity is as stated above but from a practical standpoint the trustee will consider it.

[JJCA]

Thank you all for the replies!!