This caused problems because during the prequalifying process the lender said our loan amount should be fine, but 2 weeks before closing she informed us that it was a high cost loan and they could not write it for 20% down.

I have a couple of questions:What is the job and function of a Title Company?

Under Chapter 13, if a wage earners income has a significant change, wins Lotto (LOL)  creditors may file a motion to recover debts on a different schedule, so they may not be out of the woods until debts are paid.If a bankruptcy has not been discharged, dealing in real estate with a debtor, get permission from the debtor's attorney in writing or better yet, consent from the Trustee.

Keep focused on the goals, write them down, post them on the mirror in your bathroom so you see them every single day and make one small step every single day toward those goals. 

It ruins the return on this deal.One of the things you need to write down AND STICK TO, are your personal requirements for any deal you make.  

I plan to write the contract as: $10,000.00 to be deducted from sellers proceeds for Septic tank repairs. 

@Jeff RabinowitzRequired or not, get a lawyers and insurance underwriter to comment in writing.

Does your agreement require your friend to write a check if this project loses money?

A suggestion I have for you is to offer an "incognito" function for the forums.  

When it comes to get registered will speak to lawyer, accountant and put everything in writing And etc.