Legal Question in Credit and Debt Law in California

They sure can. Chapter 7 discharges the debt but not the lien and any transfer of the property is subject to the lien. You can't just erase a lien by deeding the property to someone else. They cannot collect the debt from you, but they can foreclose if you don't pay them. If there is any equity in the house, you are also possibly liable for gift tax for the transfer to your kids.

Yes, but the HELOC will have to wait patiently until you build up equity by paying down the first mortgage and/or by appreciation of property values in the area. They will then come after the house. I do not know why you transferred the title to your kids but if they are minors then you cannot tranfer it back to you without a court order. Transferring title without the consent of the lenders is usually a violation of the mortgage and sufficient cause for a foreclosure by both of your mortgage lenders if the wanted to foreclose. If the value of the house was below the balance of the first mortgage when you filed the bankruptcy case you could have possibly filed a Chapter 13 case and stripped the second mortgage (HELOC) off the title. At this time you can never be sued for the balance of the HELOC but the house remains subject to the lien of the HELOC no matter who holds title to the house now or in the future. Transferring title to property is an extremely serious decision that should not be made without consultation with a lawyer except in the normal situation when you are selling a house and going through a title company.