Can I file for Chapter 7?

I have let my wife organize our finances and now we are in dire straits. I should had paid attention, but I didn't, I trusted that she could handle it.
We are backwards in a home 349,000 home in our area are selling at 300,000
We have 35,000 in high interest credit card debt.
I have lost my job and we had no savings therefore we are starting to miss our mortgage payments, and my wife due to the fighting has decided to separate, what can I do?

First things first: You need to get on the phone and call a bankruptcy attorney as soon as possible. Typically you can get a free consultation, and they'll let you know exactly what your options are, and why.

Now... Eligibility for Chapter 7 bankruptcy depends on several attributes, but probably the most important one is your average level of income over a three to six month period. When the republicans took congress in 2001, they allowed the banking and credit card lobby to draft a law that makes it very, very difficult to meet chapter 7 eligibility, in essense, forcing you into a Chapter 13 repayment plan. What they did was impose a "means test", in which your average historical income is compared to the "median income" for eligibility. If you're below the median income (which I believe is somewhere in the ballpark of $46,000), you're probably eligible for liquidation/discharge under Chapter 7, particularly provided your level of debt. If you're married, it's more complicated (talk to your attorney about it).

Also, you're probably going to get a bunch of letters and phone calls from agencies who claim to be able to save you from this impending disaster. In doing so, they'll offer to buy the debt away from you and have you sign some papers. The risk to doing this is that they may also overtly have you reaffirm your debt while assigning them your assets, meaning you may not be getting out from under your debt at all. DON'T SIGN ANYTHING. Talk to an attorney as soon as possible.

Remember, chapter 7 is not only a discharge of debt... It's a LIQUIDATION of assets. This means that, aside from a finite threshhold of exemptions, a Federal Trustee will liquidate your assets that are not eligible for exemption. Yes, you'll most likely lose the house, and potentially other assets you may have.

Conversely, chapter 13 is a repayment plan in which you reaffirm a portion of these debts. Some of your debts may be secured debts (mortgages), and some of them may be unsecured (credit cards). Depending on how your finances break, the decision of whether to file under Chapter 7 or Chapter 13 may be more or less advantageous. Again: Talk to an attorney as soon as possible.