What is the ruling on disposing of money collected for a debtor who is found to be not in urgent need, and should it be spent on other debtors or on his wife?

You have erred in misusing the donations for yourself and not spending them as intended by the donors. You must repent to Allah Almighty. If the funds were designated for the specific indebted man, you are not permitted to give them to anyone else. If it is not feasible to give them to him, then you must return them to their owners. However, if the donations were for indebted individuals in general and the aforementioned man was not specifically designated, then you may give them to other indebted individuals.