You have transfer fees, legal fees, forced placed insurance, servicing fees etc to deal with and who is to say the property sells for more than $40k at auction.What if the borrower the day before the sale file bankruptcy ?

My dad joined their Mastery Program and quickly had to declare bankruptcy after that. 

You need a bankruptcy attorney, today.

Some redeemed, what phase of redemption foreclosure, bankruptcy... you get the idea. 

The reason is when a borrower doesn't pay and they own the house in their personal name they file for bankruptcy claiming that fixer upper as their personal residence.

WB bought in and we filed bankruptcy 3 months later...

2nd's are not always wiped out,  I hold a 2nd that is going through a BK and have received 2 monthly payments under the bankruptcy plan.... even if its was the 2nd can hold a lien.  

This may depend, if they have an LLC then they close business by filing for bankruptcy, then there is no point in trying to collect especially if they have other debtors to pay that are in front of the line.

Last year I bought 9 properties, turned two into rentals, and although my numbers are small compared to many, I want to start thing right and begin to protect those rentals from any future failures with flipping that could take everything down.For example, Trump owns tons of real estate, files Bankruptcy in one or four of his companies, but maintains his personal assets and wealth, as well as protects his other companies from any attack from lenders on the failed ventures.I'm not looking to file bankruptcy, but I am looking protect myself and my other assets.

The bankruptcy court forced him to put all his properties under one entity and then file bankruptcy.