In Oregon, banks have traditionally chosen to non-judicially foreclose on homes after a period of default on the mortgage payments (non-judicial foreclosures can be quicker and less costly than judicial foreclosures). There is no law that requires the bank to foreclose within a certain period of time. Indeed sometimes many months or years pass before the bank gets around to beginning the foreclosure process.
When someone files a chapter 7 bankruptcy, all liabilities and assets (including the approximate quick liquidation value of the assets) are included in the bankruptcy petition. The liabilities listed include everything, including non-dischargeable debt (among other things, certain taxes are not dischargeable, student loans are generally non-dischargeable, child/spousal support is not dischargeable).