Why is my contract no good?

I live in Indiana. Three years ago we signed a contract to buy a house for $52,000. $2000 down $400 a month. We didn`t have a attorney, the seller worked at a bank said as long as we get it notarized it will be legal. We had finance problems, so this worked good for us. So we thought. In the contract it stated that after five years we would get it financed ourselfs. Any money we put in the house for improvments would be considered part of the down payment. We were having some trouble with the sellers. Went to a mortgage broker, said we could get a loan for $50,000 but the sellers have two mortgages on the house totaling $84,000.That was a year after the contract was signed. That was the first time we heard of the two mortages. Now the sellers are filing Chapter 7 bankruptcy this house is included in the bankruptcy. We got a letter from their attorney telling us about the bankruptcy on the 9th of this month. They go to court on the 26th of this month. On the 11th we got a letter from the sellers telling us why they filed, and they said they would give us $2400 back. Said they regret doing this, but they have to protect themselfs and what little they have left. My attorney says not to make anymore payments. Then he calls today and says thatwe can`t sue them for anything. We put $4000 in this house new bathroom, part of a roof, and a new furnace. He says we can`t get that money back. He also says that the sellers dosen`t have to give us the $2400. He also says the bankruptcy trustee could sue us for the last two house payments. I`m I the only one that thinks this is really unfair. I called one of the mortgage companys to see if I could pay for this house, he said I could but I would have to pay almost $81,000 for the house that does not include finance charges. The sellers are reaffirming their house, and I`m the one who is going to be homeless. CAN ANYONE HELP ME , PLEASE

[HomeGuru]

I'm sorry. This is one very hard lesson. Moral of the story: always have an attorney review the contract when buying real estate. Always make sure you know what you are buying by getting a title report, survey, home inspection etc. And always have the contract recorded.
You are unsecured and the 2 mortgage companies are secured creditors.

I suggest getting another attorney and another opinion. There is a way to fight this but it would not be worth it since there is no equity in the property.