When a homeowner files for Chapter 7 bankruptcy protection, the very first page of the filing that the mortgage company turns to is the Statement of Intention. The Statement is a disclosure of the debtor’s intention to “reaffirm” the mortgage and continue paying, or to “surrender” the home and vacate. Vehicle financiers and other secured creditors are also listed along with mortgage companies. Leases are listed in a separate section.
The Statement of Intention requires the debtor to state whether (1) the property will be surrendered or retained, whether (2) the property is claimed under an applicable exemption law, and whether (3) the debtor intends to reaffirm the debt secured by the property. 
It must be filed within thirty days after the debtor files a Chapter 7 or before the 341(a) Meeting of Creditors, whichever is earlier. The statement must be served on the trustee and each creditor named in the statement. The debtor may file an amended statement at any time before the time period for performance of the intention expires.
For those homeowners with missed payments, Chapter 13 may be a better option because Chapter 13 allows the debtor to cure the arrearage over the course of three to five years. Long-term secured debts like mortgages, however, will pass through a Chapter 7 bankruptcy unaffected by the discharge. After all, mortgage companies are delighted to continue receiving payments from Chapter 7 debtors, as long as they pay in full and on time.
I am still a co-owner of a home that my ex husband occupies. My ex is current in the 1st mortgage payments, but has not been paying the second mortgage (a home equity line of credit which amounts to roughly a third of the value of the home). The house is $2,000 to $5,000 underwater with regard to these two mortgages. Should I elect to “surrender” or “retain”?
This is something that you should discuss with your bankruptcy attorney, however based on the facts you’ve given me, I would suggest surrendering the home. The whole point of bankruptcy is to get a fresh start. Retaining a property (and subsequently reaffirming the debt) that you no longer occupy and co-own with an ex sounds to inadvisable.