The wife would be liable for the debt.

Bankruptcy might be an option depending on many factors.

If she will do so enter into a new payment arrangement with the proper terms so that when she stops paying, it will be better when you sue.

Yes. The estate can sue on the promissory note.

You can sue them but the police will not prosecute.

You can sue him. If you can prove it was intentional, you may be able to receive a punitive damages judgment.

An attorney might be able to pick up the case from this point, depending on many factors.

Yes that may be negligence. Consult with experienced attorneys.

Report this to the FBI. They handle this sort of fraud.

If your insurance does not handle it correctly, it would be an insurance bad faith attorney.