It will only get wiped out if you stay in 13 and the first lien holder agrees to the sale. Most first lien holders want a dismissal, discharge from the court. On occassion, a first lien holder will approve a sale while the seller is active in 13, but it's not likely. If the bankruptcy converts to 7 and is discharged or dismissed then the second WILL REMAIN ON TITLE and will need to be negotiated.
Sorry you are going through this. Sounds like you were dealing with someone who didn't know what they were doing.
I hope there wasn't anything else on title.
*I'm not a lawyer and none of this is legal advice :)*
Maryann Little, VP Mitigation
Short Sale Mitigation, LLC
Unfortunately buying a short sale is always difficult and nerve wracking. I personally don't think the small discount you get is worth the hassle.