Real property does not automatically revert back to the prior owner unless the deed so provides. Property acquired prior to marriage remains the separate property of that spouse unless it is transferred to the other spouse. Arguably, both properties became community assets during the course of the marriage. Even so, the spouses can agree to return property to each other as part of the divorce decree.
An unexpired lease is an executory contract. Executory contracts are discussed at Section 365 of the bankruptcy code. They must be assumed by a trustee in a chapter 7 case; otherwise, they are rejected. Executory contracts in effect at the time of the bankruptcy filing are assets/liabilities of the bankruptcy estate.
Insurance companies commonly settle for twice the medical expenses, although you may get more or less depending on the facts of your case. There is little doubt that having an attorney wll get you more for pain and suffering.
If you were a bona fide purchaser - meaning that you had no actual, consructive, or inquiry knowedge of the dispue between the borrower ad the lender at the time of auction- your inerests in the property may trump those of the former ower suchthat you can keep the property free and clear of the claims of the former owner. I say "MAY" because it depends on the type of wrongful foreclosure being alleged. There are cases which have held that if the defect in the foreclosue process involved...
Your husband's income must be disclosed in your bankruptcy schedules and will be taken into account in determining whether you (i.e., you and your husband together) make too much money to qualify for chapter 7. You should speak with a bankruptcy attorney before you file.