1) You can file bankruptcy regardless of whether you're upside down on a home or not; bankruptcy is NOT limited to those who are underwater on a home loan. Maybe the attorney meant he felt you shouldn't, based on his judgment and experience file, or that it wouldn't help you much--but you could file if you like.2) Bankruptcy temporily stays, or delays, foreclosure, but does NOT prevent it. If someone, like a mortgage lender, has a security interest in property, he, she, or it can still foreclose unless you continue paying the secured loan even after bankruptcy. There are some nuances to that, but that's the basic rule.3) In practical terms, from your perspective, you're underwater; from the 1st mortgage lender's perspective you're not, since as long as there's positive equity compared to the 1st mortgage, if they foreclose, they'll get something (the positive equity)--the first loan must be  paid in full before second mortgage or home equity is paid at all.You may wish to consult with a different attorney--at a minimum, it seems as if you and this one are not communicating in an effective way.