If you'd like, I can find out for you if a Notice of Default was filed on the property. In the event it was, assuming the debt is not cured, you would have a minimum of 3 months and 21 days before the Trustee's Sale -- plus another 60 days before the REO bank can legally take possession of the premises. Drop me a line if you want to chat about this from a real estate perspective -- not a legal one.... Filing of BK will stay ay foreclosure proceedings. I can also give you a name and number of an EA for tax related implications and questions. Knowledge is power.
As Dot stated below, I would suggest having an initial consultation with an attorney that specializes in real estate matters and ideally has experience with tenant/landlord disputes. Typically the fee for this initial meeting is pretty reasonable and sometimes free. It will put you at much more of an advantage in that you will have some knowledge of the statutes that govern your situation.
I would also contact a real estate professional to see if you can find out how far behind the owners are in payments. This is common knowledge that is reported in title records that are easily accessible to real estate agents.
Now, completely off the record (not speaking as a real estate professional), I've seen cases like this where the tenant has completely haulted rental payments and stayed in the house through foreclosure which can take months. After foreclosure, the bank will give you a notice as to when you will need to vacate. Every bank handles foreclosure a little differently. However, in this type of situation, the owner that is now in default and facing foreclosure has little recourse as to demanding that you pay rent. Going a month or two, maybe more without paying rent will make up for the loss of that $7000 deposit, which is pretty much bye bye if the owner can't even pay the mortgage at this point.
I hope this helps!
I am not an attorney, so this is just friendly advice - not professional advice, but I would think you should have the opportunity to go before the court to state your case. I'm not sure what will happen with your deposit! Keep me posted...