If the former owner's file Bankruptcy it delays things even longer.

Get too leveraged and you don't get up losing money, you end up in bankruptcy.  

One potential obstacle that I have with pulling out equity or getting loans other than student loans in general is the fact that I have a bankruptcy/short sale on my credit record from a previous investment property that I acquired prior to 2008.

Or if it's discharged in bankruptcy.

How do you settle the debts owed on a property you purchased from a motivated seller who is behind on his mortgage payments and is facing foreclosure or bankruptcy ?

It appears they're under so many lawsuits and can't get permits to rehab any properties, I wouldn't be surprised if they file for bankruptcy soon.

Seller was foreclosed on the house about 4 years ago and also filed bankruptcy.  

It can also put you in bankruptcy.  

Creditors, even through bankruptcy have a much harder time seeking judgments against a fractional interest than a whole interest.

I did not collect a security deposit and if they want one back they would have to file claim to the old landlord but he is broke (this was a bankruptcy auction).I do feel bad but there is no fault to me.