Forclosure and bankruptcy

Here is the situation. I received a notice of default in Feb of 2009. The Sale in California was to be on June 23 2009. I retained an attorney in May of 2009 to file a chapter 7 bankruptcy. He was aware that a notice of default was pending. The sale date was extended twice due to federal moratoriums , and now he is prepared to file the bankruptcy. He was under the impression the house was already sold. He suggested I talk to the lender asap to see if they plan on selling the house on their new sale date which is July 23 , 2009. He is concerned that because the house is still in my name there might be problems with potential lawsuits or damage done to the house. I moved out of the house in June , thinking it was going to be sold. He mentioned to ask the lender for a deed in lieu of, in an effort to get the house out of my name asap, this as well would save the lender bankruptcy costs.
I'm also concerned about a deficiency judgment on the second loan. Any advice would be really appreciated, as you can see, it's 2:00 am and I'm already losing sleep over this.

Thanks for the help