I take it that the Chapter 31 bankruptcy is a typo and is a Chapter 13 bankruptcy (court-ordered payment schedule).
I’m surprised by the clear his-and-her status of the debts. Rule-of-thumb is that debts incurred in marriage are joint debts and that creditors can go to either party and/or any assets to get payment. Basically, they probably won’t bother if it’s your Ford or her Datsun that they repossess. This is supported by her need to use her power-of-attorney to get more cards and spending cash.
My first step in your shoes would be to get a very very clear picture of the debts and to stop the bleeding. Cancel all cards, close all accounts that are in any way associated to you, cancel subscriptions and all payments. I would want this done by tomorrow…
The second step is to get legal guidance on your accountability and if any of the debt can be collected from you. Be clear on what a divorce will look like if you decide to go that path. What would you have to pay? What would be her debt? What about your pension? What about support and so on and so on. Don’t think of this as having decided to divorce – it’s plain planning just in case.
Keep in mind that in a divorce settlement you two probably can’t unilaterally decide she takes the AMEX debt and you take the vehicles. The lender has a say too. If the card was issued due to your name or credit-score then they won’t accept offloading it to someone with a couple of bankruptcies.
Once I had all that in line, I would confront her and ask what she wants and what she’s prepared to do to get that.
Some examples of what might be required:
Go to GA (if the cash is going to the casinos).
Be open about her finances – To the extent where her pay is deposited in your account, you transfer living expenses to her, and she lives within her means.
Maybe even relocating to a casino-free area.
IC
I would strongly suggest you BOTH join a financial management course of the type Dave Ramsey offers.
Basically, she needs to acknowledge the problem and be willing to deal with it in a realistic way. There needs to be a plan in place and she held accountable to that plan. For example: If she goes to Gamblers Anonymous she needs to check in so you know she’s there and not at the local casino. She needs to account for every dollar – to the extent she get’s a receipt for her coffee.
It sounds drastic, but it takes some months to break behavioral patterns, and even longer to deal with addictions. I am not suggesting an ongoing platform for a relationship, but more something temporary if you want this relationship.