While urine retention does happen to those of us with bladder cancer, it is not panic time; it is however time to seek immediate assistance. Your father in law is in the right place - the hospital - where he can be worked-up and his problem will be addressed.
Sometimes placing a catheter into the bladder produces no urine despite the feeling of a great urge to urinate (been there). There can be a number of reason for retention beside bladder cancer, including kidney and ureter blockages, up-stream from the bladder. The hospital doctors will find the immediate cause and provide him with relief. Moving surgery ahead can be a good choice in many situations.
The following is a link to a National Institutes of Health information booklet about the urinary system & problems, including a section on urine retention. I hope it is helpful.
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My father in law was diagnosed with bladder cancer and is scheduled to have bladder removed on the 16th of March. Last night he was struggling to urinate so he went to the hospital where they inserted a catheter. This also is not helping. They have not gave us much information except this is a bad sign and they may need to move his surgery day up to the day after tomorrow. Is this normal or should I be panicked?