But what if PM went bankrupt or out of business or ran away with all his clients security deposits?

If they nearly went bankrupt 3 years ago because of massive medical debts, but are current on everything else, that is a different story than someone who is 60 days behind on 5 credit cards right now. 

I'm having a tough time finding a contractor that wont bankrupt me with their estimates.

Wells Fargo is not likely to talk to anyone but the original mortgagor and Obtaining the Quit Claim deed does not remove the lien/mortgage that the current owner has against the property (actually Ahmed is not clear on who the owner is, the Lady who went bankrupt or Wells Fargo {if they've already foreclosed} or someone may have been awarded the property in the bankruptcy action. 

I am a newbie as well and plan on house hacking a duplex. figure try to make all the mistakes up front. get all the experience I can hopefully w/o bankrupting myself.

You need a cash reserve fund sufficient enough to carry a 6 month vacancy.There is plenty of risk in this business and many do go bankrupt if they are not financially prepared.

The seller did not disclose that he was going bankrupt and that the sale would be subject to bankruptcy court approval until after we had executed all contracts.

In addition, currently you do not have senior protection if Lendinghome goes bankrupt.  

My boy loves it, and he actually bankrupted me today. :)

But they were pretty pathetic with credit scores below 550, no income, recently bankrupt, etc.