Hi unstacked
Courses of action are determined by your preferred outcome. For example, do you wish to keep the family home? If so, and if the mortgage on the family home was in arrears on 1 January 2015, then you are entitled to apply for a "no veto" Personal Insolvency Arrangement (PIA). The residual with KBC gets written down to zero, and the mortgage on the family home gets reduced to an amount that a Circuit Court Judge decides, based on a proposal submitted by your Personal Insolvency Practitioner (PIP).
If you aren't interested in keeping the family home you could apply to the High Court for your own bankruptcy. Incredible as it may seem, you and your husband could still end up keeping the family home. The amount of negative equity attached to the family home would incline the Official Receiver towards selling your half of the beneficial interest to your husband for a "nominal" sum, usually €5k. Caveat, the mortgage company, Ulster Bank?, would expect your husband to continue making full repayments on the mortgage of the family home. Might not be the best undertaking with €200k of negative equity hanging out there.
Another possibility is that KBC might take 10% of the residual €200k, €20k, as full and final settlement. You won't be able to negotiate this by yourself. You will need an accountant with insolvency experience, or a PIP, to get this over the line. In other words, you will need to appoint a third party to negotiate on your behalf. Again, Ulster Bank would still want payment in full over time.
Try and avoid warehousing part of the mortgage on the family home. All it does is "kick the can down the road". Paying a mortgage in retirement? Not pleasant, and often not possible. The aim of insolvency legislation to to return "insolvents" to solvency within five years. So the recommendation of this poster would be to investigate your eligibility of a "no veto" PIA. Best place to start is with an experienced (PIP).
Finally, to answer the question, "Will KBC go after our home?" Unlikely. And if the High Court adjudicates you bankrupt they can't touch you or your home. In theory they could get a charge over it, assuming you haven't already petitioned for your own bankruptcy, but it would be a waste of their time and their money due to the €200k of negative equity associated with the family home. Also, in theory, they could obtain a court order for payment, and then apply to a District Court for an installment order, or pass it to a City/County Sheriff for enforcement. If they were thinking of such actions you would probably have an inkling of it by now. Just be aware of the possibility but don't worry about it too much.