For example, if you have an LLC and in the course of work for the LLC, you accidentally drop a hammer on your neighbor's Lamborghini, he can sue the business and potentially win a judgement against the business.

Chances are you will - have a deficiency judgement, - if there is a second mortgage you will owe that money, - the IRS views the debt as forgiven income (see a CPA), http://www.irs.gov/Individuals/The-Mortgage-Forgiveness-Debt-Relief-Act-and-Debt-Cancellation-- your credit FICO score will drop as much as a foreclosure,and - your borrow-ability with any government agency like FHA will be harmed for a long time.So what is left?

Perhaps Joshua Marks, Ibrahim S or someone else from Jersey can jump in on this one.As for tenants paying back, that depends on whether or not you get a judgement against them.

Even then, what's a judgement against a bankrupt person worth?

I am pretty sure that lenders can pursue deficiency balances via deficiency judgement in Nevada, but I could be wrong.So your only risk is the lender foreclosing on the collateral property, and then pursuing you for any deficiency balance once liquidated.

In some properties that are in very bad shape (as a lot are these days), some inspectors can rush to judgement and require all of a particular thing be redone (all electrical/plumbing) even if it may not need to be, or demand a gut rehab at most extreme.

Also a Quiet Title suit must be done to remove any mtg.s and private judgements.

For me this means not putting someone in a property that evidently doesn't have a good chance of being able to complete the purchase (I of course am not making this judgement alone, that's where pre-screening from a qualified mortgage lender comes into play...in my process anyway).

The auto he drove was leased in the GF name.I sent it to collections for the 60 days, all damages & the water bill & got a judgement of over $3200 paying 9% (in those days).

Just simple free things you can do to make a character judgement.