What can we do about the second mortgage?

The 2nd would be Discharged in your Chapter 7, nothing owed by you on it.

It is not clear what your situation may be. For example, if the mortgage and equity line were discharged in bankruptcy, then there is nothing more you need to do. The second mortgage holder became an unsecured creditor and was entitled to the same treatment as all other unsecured creditors.

Although, in some circumstances the 2nd mortgage/lienholder needs to agree to a shortsale or deed in lieu, if you are left with a deficiency balance after bankruptcy, then you are not liable for the deficiency balance because of the bankruptcy. They can still send you money and let you know what the deficiency amount is, but they cannot collect from you. If they try you can sue them for violation of the bankruptcy discharge order.

If I understand correctly, you are trying to do a deed in lieu to the first mortgage holder. This will not work and won't be accepted by the bank. In a foreclosure, the first could avoid the second lien. A deed in lieu would simply put them in the same position as you and the second lien would still attach.

If you obtained your discharge in the chapter 7, you also obtained a discharge of the debt on the second mortgage (as long as you did not sign a reaffirmation agreement).

That depends in large part about what you are doing about the first mortgage. If your house has been lost or will be lost to the foreclosure of the first mortgage, then there are two possibilities. The distinction is subtle but it is really important. If the second mortgage was money you originally used to buy the house (like one of those 80/20 loans that were so popular just before the bottom fell out of the world), then your loan is a "purchase money second mortgage". If the first mortgage forecloses they get the house but only the house and you owe nothing more. The purchase money second mortgage just goes away and you owe nothing to them. If the loan servicer was changed, but you did not refinance, it is still a purchase money second mortgage. If the original second mortgage sold the loan to another bank, but you did nothing to initiate the sale, it is still a purchase money second mortgage. If the second mortgage was a refiance, or a Home Equity Line of Credit (HELOC) or anything else that is not a purchase money second mortgage then you will be liable for the obligation once the first mortgage foreclosure is complete. To avoid that liability, you will need to file a bankruptcy. I suggest you rethink your deed in lieu idea. It is very beneficial to the mortgage company but so far as I can tell, there is little benefit to the homeowner. Unless you have already moved out or must move out to accept new employment or some other important reason, stay put, live in the house until it forecloses and take the money you would have paid in mortgage payments and bank it.

The 2nd mortgagee can sue you for a deficiency, & you aren't free to do a deed in lieu because you can't convey clear title.

You misunderstand the discharge. Your legal obligation to pay the debts was discharged, but the secured lenders still have liens on their collateral (house or car) unless a court orders otherwise. You did not say whether you filed a chapter 7 or 13. If you filed a chapter 7 and want to surrender the house - then don't do a deed in lieu. Instead, just let the lender foreclose. Make sure that you do not sign a reaffirmation agreement with the second lender. Otherwise you are obligated to the pay the second mortgage. Most bankruptcy attorneys offer a free consultation. But, if you do not need information about bankruptcy then you may want to talk to an experienced bankruptcy and real estate attorney about your situation.

Your question is unclear. If you filed bankruptcy both debts are discharged, therefore there is no reason for you to provide a deed in lieu.

You don't have to do anything for the second mortgage (equity loan) if you did not reaffirm the debt and the debt was already discharged by the court.

Why bother doing a deed in lieu? It will not benefit your credit rating, the debt has already been discharged, 2nd has been discharged, why not live there until foreclosure sale? Deed in lieu only benefits realtor who gets commission.

Of course you must have listed the second mortgage as one of your debts in the bankruptcy. It will be discharged also.