Inherited A Property but...

My wife is about to inherit a house from her granddad who has passed away.
He left a will asking for the house to be left to her and everything else shared with other family members.
He has a small mortgage on the house, about £1300 is all that is outstanding
plus other none secure loans, credit cards ect and the total debt is about £16,000

We live in a council house at the moment but want to buy the house on the "right to buy" we will get about 45% discount on it.

What we want to do is mortgage the house which she has been left to pay of the debts her granddad owes plus buy our council house on the "right to buy" and rent the council one out and live in her granddad one

All the above only comes to about 40% of the value of the house she is inherited

The question is, how do we go about this? What’s the best way, can we even do this or is there a better way?

We have poor credit history for a start and both of us work :)

Thanks
Ste