Here's my Schlatt DreamSMP headcanons :
Quackity left when Schlatt's drinking problems became too much and didn't want to keep Tubbo as he saw that the baby looked too similar to Schlatt
Schlatt tried his best to be the best dad, despite being heavily in debt and often called Phil for advice on raising Tubbo
Schlatt was more sober than not during Tubbo's first years, but fell back in his old habits as Tubbo started wanting more toys to play with as he grew up.
Schlatt used to be George's right hand man, but got fired after him and Quackity's divorce, leading to him owing thousands to George and thus, having a very poor reputation
George became more persistent about the money Schlatt owed him around the time Tubbo grew older, which led to Schlatt being verbally abusive to Tubbo when he would walk in on his father talking to George.
When Schlatt was extremely drunk, it would be the only times where he would show his extremely sensitive side and would often try to go out of his way to make Tubbo happy.
Schlatt would always give at least half of his food to Tubbo, sometimes lying to Tubbo when the latter would ask if he ate
Schlatt called Phil to ask if he could take Tubbo, but was so reluctant that he didn't want Tubbo to know that he was being given away, thus putting him on a box on the side of the road
About 10-15 years passed after Phil took Tubbo, Schlatt took that time to pay off his debts and spiraled down in a money/power hungry madness. He quite disappeared from the public between that time, just so people would forget who he once was.
Everybody pretty much forgot that Quackity and Schlatt were ever a thing and Phil never told Tubbo who his real father was, despite being somewhat obvious by the horns growing out of the latter's head.
Schlatt demanded to have Tubbo as his right hand man to see how much genes he inherited from him. When he realized that Tubbo had no interest in that power, he sent him as a spy, knowing that he would betray him.
Schlatt died unhappy, mostly because he never got to tell Tubbo that even if his father is hated by the whole nation, even if his ambitions and madness took over him, he still loved his son more than anything and that he never cared if Tubbo doesn't fall into his father's footsteps.
The whole nation started hating Tubbo after finding out he was the real son of Schlatt, thus leading to Tubbo ripping out his own horns.
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