Priority Debts

• Bankruptcy reform laws created "priority" debts ineligible for bankruptcy relief, according to the book "How to File for Chapter 7 Bankruptcy." Debtors cannot include child support, alimony or court fines in their cases. They also can only include federal, state and local tax bills if they were incurred at least three years before filing bankruptcy. Bankruptcy amendments also bar Americans from including any debts related to a crime, such as a civil lawsuit due to drunken driving.
  
  

Student Loan Considerations

• Before 2005, people with serious financial problems could usually include all student loans in their bankruptcy cases. Bankruptcy reform laws make it virtually impossible for most people to eliminate federal student loans such as Stafford loans. A judge is legally supposed to discharge federal student loans only if the debtor is seriously and permanently disabled or in a situation such as the college going out of business. But private student loans and credit cards can be included in personal bankruptcy.
  
  

Chapter 7 vs. Chapter 13 Qualification

• Not all financially struggling Americans can request permanent forgiveness of many of their pre-existing debts under Chapter 7. Each debtor must prove he earns less than his state's annual median income level or that he cannot reasonably cover basic household expenses while repaying creditors. As of 2011, the annual median income for a single California resident was $47,969, while the yearly figure for a family of four in Washington was $82,422, according to the U.S. Trustee Program. People who cannot economically qualify for Chapter 7 must either forgo bankruptcy as an option or partially repay debts under Chapter 13.
  
  

Credit Counseling Requirements

• Bankruptcy reform laws require all debtors obtain pre-bankruptcy credit counseling. The session usually lasts about 60 to 90 minutes and must be completed through a federally approved agency, according to the Federal Trade Commission. Debtors must complete the session no more than six months prior to filing personal bankruptcy. Failure to complete this requirement will lead to a denial of the bankruptcy case. Bankruptcy filers also must complete an additional financial counseling session before receiving a final bankruptcy approval, or "discharge."