Open Macintosh HD > Applications > Utilities > AirPort Utility
Click on the Time Capsule icon, then click Edit
Click the Disks tab at the top of the next window
Click Erase Disk
You will be presented with several Erase options.....Quick Erase, Zero Out, 7 Pass, etc.
Quick Erase will only take a minute or two and be fine for your purpose since you are keeping the Time Capsule.
If you were moving the Time Capsule to another user, the Zero Out option will replace everything on the drive with zeroes. This will take 3-5 hours depending on the size of drive that you have in the Time Capsule.
7 Pass zeros the drive 7 times, etc.
BTW, the Time Capsule drive is formatted in Mac OS Extended (Journaled). This cannot be changed unless you pull the drive from the Time Capsule (voids the warranty), place it in a separate enclosure and use Disk Utility to make the changes that you want.
Then, you have to reinstall the disk back in the Time Capsule.