I know @Michael Blank has a pretty rough one with the DC area and code violations with a monster tenant almost driving the property to bankruptcy... something like that?)

Almost always a foreclosure that goes that long will have a bankruptcy mixed in too, so look for that and see whether their BK was discharged or dismissed.I would just look for another candidate myself because I feel that if they weren't making a housing payment when they would own the housing, then they are very likely to not make housing payments when they aren't the owner.

is there some kind of policy for the property management company that u set up to help cover you in a lawsuit, or do you just file bankruptcy on the property management company

It is 'preferred' in that in the even of bankruptcy or liquidation it takes priority over other regular owners.

Tenant gives us a bunch of 'reasons', he owed the IRS lots of money, his wife filed for divorce (I guess they were separated), wife wants alimony, he had to hire a lawyer, he's going to just file for bankruptcy, on and on.We find out he is also sub-leasing a room to another person who refused to give us her name or SSN, even after we told her we were not going to charge more, we just needed her information for insurance and legal reasons, she still refused.So we give him a week to come up with the rent, he can't so I served an eviction notice (his roomie then starts calling us and yelling at us that she paid him her part of the rent) and he says he can't be out in 3 days.

One of my current tenants has a bad credit due to a bankruptcy as a result of medical bills.

We helped another avoid bankruptcy.

Assets are sold for the benefit of creditors, there can be assets remaining if everyone gets paid as in accessing the bankruptcy a lower value may have been accepted.

The state is near bankruptcy.

It then goes on to say the previous owners filed bankruptcy, and the insurance company STILL hasn't paid (claim filed in 2008...surprised, anyone??)...