couple of key points, here:
"government job..."  Many are transferable.  She could sell out now (while the gettin's good--4 years from now is a real crap shoot.)  Live and work another 4 years in a smaller town--lots of options still for her as she is in that wonderful "300,000 over asking" category.

Pay off all debts.  Sure.  Dig into that house-sale equity to do it, because...

"pensions and bridge benefits...$3,600 a mo."  This, and I presume she is a single middle-aged woman.  What's her PROBLEM??