You are not liable nor will it effect your credit, at least in regards to the mortgage she has on the condo. Any other loans or credit cards that she is on and if she is behind will effect both of you. Going forward her financial issues will only effect you if as stated below both of you will be looking for loans or credit together.
My advise would be to get on the phone with the bank NOW they do not want to foreclose on your home, there are modification packages out there that they can offer. Yes, last resort would be a short sale then deed-in-lieu-of but these are forms of foreclosure and will adversely affect her credit as well.
Buy a home after foreclosure expert
When in doubt consult a real estate attorney to be 100% clear.
I am clearly not an attorney but I have encountered similar issues with customers facing foreclosure.
Have you and your wife discussed short sale as an option? If approved by the lender the impact on credit is not as dramatic as a foreclosure.