Which vehicle? The Tahoe with $17K owing on it? Can you bus, bike, walk, or use another car to get to work/wherever you need to go? Which vehicle - the Mazda (? I think that's what your wife has) or the Tahoe - has the better gas mileage and is better suited for your family? Which has the better repair record?
If you sell the Tahoe you will probably not get what it's worth. You may find yourself still owing on a car you no longer own. Not sure how that works in the US (I'm assuming that's where you are). That extra $560 (?I think that was your monthly payment) would go a long ways to helping you meet your other financial commitments, whatever they may be.
We always maintained if we had one person working we only owned one vehicle. As I have not worked outside the home in over 20 years, we've only ever had one car. Yes, sometimes it was tough. DH had to take the bus, bike, or walk to work if I absolutely needed the car. And if there was an emergency he had to bring the car home right away to get kids to hospital, or we relied on friends to drive us. But over the years it's been the best for us.
Also, the only capital expense we go into debt for is a house. Anything that depreciates in value is paid for in cash...period.
Not knowing your exact situation it's hard for anyone to tell you what to do. Besides, you need to be making these decisions with your wife.
I think you need to research your options better. Repossession of a vehicle for non-payment is completely separate from bankruptcy. It is possible to do one without the other. It might be possible to avoid both.
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