We updated the house to match its low price range, which required careful budgeting and strategic renovations.

Pretty unreal.At some point, this house of cards will collapse.

And that educational out, you know, where you get a degree that offers you upward job mobility, where you move into a big house, and you drive an expensive, late-model car? 

Address the leak immediately, once the house is water tight get everything dry and then you can approach the cosmetic repairs over time. 

Depending on location they can cost a lot to replace but when you factor in what you save from paying sewer bills it’s cheaper in long run.It would not stop me from buying a house

Thereis  too much info for here but given your stated information, I'd do the chapt 7, save what I can, and move on.If you mentioned you owned a house, the recommendation would be different.

I am closing on a house and family member of the owner is living there, who has no lease, or should be in the house once I close.

EDIT - The house itself is a bit boring IMHO.

So if you are looking to house hack in N Dallas, I would focus on a value add SFR you can get under market, perhaps. 

Hello Zak House in Phoenix.