These improvements significantly enhanced the property's market value.

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? 

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.

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

EDIT - The house itself is a bit boring IMHO.

Hello Zak House in Phoenix.

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.

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

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

I had a seller send me a questionnaire asking for information on what kind of improvements the buyer would do on the property after he buys it and how much he was willing to spend!!!