Bankruptcy Law Questions? Ask a Bankruptcy Lawyer.
They will most likely not have a choice but discharge the loan for the failed business even if they hold the note for the mortgage. She is reaffirming the note on the house, so you should not have a problem.
You include spouses income on the petition to the extent it is used to calclulate her means test. Another words in order to meet the means test, you must use both of their income for the last six month's prior to filing. The spouse's income is only used for means test calculations.
If you include the Husband's debts he will have to join the petition and they would be declaring joint bankrutpcy. If he is joint on any of her debt she is discharging, he would be 100% responsible for the debt after she is discharged, so you should make sure that the debt she is trying to get rid of is in her name only, or it defeats their purpose.
You need to warn them that the bankruptcy may show up on his credit report for the mortgage, it may not happen, but I have seen it more and more and it is legitimate to report that the mortgage was in bankruptcy. Most people are very upset to find out that the spouse's credit is affected even if they didn't take the bankruptcy.