If my wife has beenout of state for7 days and filed for legal separation, is this legal?

Your question raises several issues, but the eventual controlling factor will depend on where you wife moved to and where you live.  I'm assuming that you live in Texas because you submitted the question under the Texas category.  If this is the case, venue and jurisdiction are proper in Texas because that is where your children reside and have resided over the last six months.  Most states require more than 7 days of residency before a spouse can file for divorce.  However, depending on the laws of the state she went to, she may be able to file a similar type of petition.  Technically, she can file a petition anywhere, but you will have a strong basis for contesting a divorce filed in another state because of your residency and the residency of your children.  It sounds like she's taking you through the ringer-- so you may want to get things moving in Texas and file for divorce here.  (Keep in mind that Texas only has divorce provisions-- there is not a statute for "legal separation").  Your next issue is her applying for benefits.  If you can find out where, you should let them know that you have the kids and have filed for divorce in Texas.  If she's duping you out of $700 and is filing documents to get free housing, she may be fudging on where the kids are.  This is important to you because if a state agency pays benefits for the hypothetical support of your children (like housing or food stamps), they can intervene in your divorce and require you to reimburse the state through child support payments.  Stop the bleeding now by making sure they understand you have the kids.  The third issue is the draining of the bank accounts.  There's not a whole lot you can do to get the money back since those funds are considered community property.  But there are some things that you can do for damage control.  First, close the account so that she can no longer get access.  Do the same for any credit cards in both your names or on which she is an authorized user.  Second, talk to your banker about the situation and try to set up a payment plan.  Some won't work with you-- but in this economy-- when someone is offering to pay instead of filing for bankruptcy, they tend to be a little more flexible.  If any businesses were left hanging because of the overdrafts, do the same thing with them.  I know it seems unfair that she created this mess and you're having to fix it, but if you want to help your credit history, you need to work on it.  Keep good notes on everything that you did and had to pay.  When you file for divorce you can ask for recoupment (i.e. that she pay you back) or you can ask for a greater distribution of property because you were out more funds cleaning up her mess.  Depending on your income, you may also qualify for legal aid.  If you don't, many family law attorneys now offer payment plans.  If the financial damage is too bad, you may want to consult with an attorney that does family law and bankruptcy/consumer law so that you take care of everything at the same time.