What are our rights if our rental has mold?

In every lease there is an implied warranty of habitability which requires the landlord to maintain the premises in a habitable condition by complying with local and state housing codes.  The mold is a health hazard and would constitute a breach of the implied warranty of habitability.  When there is a breach of the implied warranty of habitability, the tenant notifies the landlord and the landlord is required to respond within a reasonable time by making the necessary repairs.  If the landlord fails to respond within a reasonable time, the tenant has the following remedies:  The tenant can make the repairs and deduct the cost from the rent or the tenant can move out and terminate the obligation to pay rent for the balance of the term of the lease or if the tenant stays on the premises, the tenant can withhold rent and defend against eviction.  Another alternative is to sue the landlord for breach of the implied warranty of habitability.

As for your question about whether it is illegal to rent the place in that condition with the mold, this would violate the housing code and it would be advisable to contact the code inspectors who will take legal action against the landlord.

As for your question about the impact of the bankruptcy, the landlord may have reaffirmed the debt which means agreeing to continue making payments on the mortgage.  If that is what occurred, then renting out the place would not be an issue.  It is also possible that the bankruptcy trustee may have authorized the landlord to continue generating income with that rental property.