I don't think you are entitled to a reconveyance. A reconveyance of the deed of trust is a release of the lien, and is usually recorded only when the loan has been paid off. Here, the 2nd trust deed holder is no longer able to sue you for the debt since the debt was discharged by your Chapter 7 bankruptcy back in 2008, but the 2nd still has a lien for which it is entitled to be paid if and when you sell or refinance. The bankruptcy did not extinguish the lien.
A reconveyance for a Deed of Trust upon satisfaction of any loan obligations is addressed in California Civil Code § 2941. California Civil Code §2941(b)(1) provides that if you have satisfied your loan obligations, then the lender (beneficiary under a Deed of Trust) or its assignee shall within 30 calendar days execute and deliver to the Trustee of the Deed of Trust several documents. These documents include the original Promissory Note, Deed of Trust, and a Request for a Full Reconveyance.
The Trustee shall then execute the Full Reconveyance and shall record the Full Reconveyance with the County Recorder within 21 days after receipt by the Trustee of the original Promissory Note.
If the Trustee or the lender (beneficiary) does not fulfill the Trustee's duties, then you as the Trustor/Borrower have options. First, if the full reconveyance has not been recorded within 60 days of your last required loan payment, then you can make a written request to the beneficiary/lender to issue a full reconveyance under Civil Code §2941 (b)(2). Second, if the full reconveyance has not been executed and recorded despite you making all the payments and writing the aforementioned request to the lender, then 75 days after the last required loan payment was made you may have a title insurance company record a release of the obligation. (See California Civil Code §2941(c).)
You will need to contact them to negotiate to pay them a settlement of the debt to release the lien. In many instances, you will no longer be working with a mortgage servicing company, but with a debt collector.
Your bankruptcy attorney may be a good person to contact for help with this.
Hope this perspective helps!
Neither your bankruptcy nor the 1099C mean your house has been released of the lien created when you borrowed the money. That debt may not be collected from you but the beneficiary of the second deed of trust can sell your house to get the money as soon as your house is worth more than what you owe the beneficiary of the first deed of trust. As you pay down your first loan and maybe the house goes up in value the day will come when the holder of the second loan will try to foreclose to sell the house and get its money. You need to negotiate a settlement to pay off your second loan. Another possibility may be to file a Chapter 13 to strip off the second deed of trust lien. In some areas you might not be able to strip of the lien unless you are eligible for a Chapter 13 discharge and if so you must wait until 2/2012 to file the Chapter 13 case.