Is it permissible to divorce one's wife out of fear that she may be unable to raise the children, especially since she regrets her past and wishes to correct her path, or is it better to return her to her family until she settles her debts?

It is permissible to divorce a wife if there is a fear that she will not raise the children properly, for divorce is permissible when there is a need. However, if the wife is remorseful and determined to live amicably, then she should be kept and treated kindly, and not sent back to her family. Part of good companionship is helping her repay her debts.