• When an individual citizen decides he cannot pay his bills as promised, he usually can file for the type of debt relief known as federal bankruptcy, according to the book “How to File for Chapter 7 Bankruptcy.” But bankruptcy, whether the type is Chapter 7 debt forgiveness or Chapter 13 partial debt repayment, requires each petitioner to adhere to a number of federal regulations.
  
  

Chapter 7 vs. Chapter 13

• Not everyone can qualify for Chapter 7, which allows permanent relief of existing debts such as credit card bills, personal loans and medical obligations, according to the book “How to File for Chapter 7 Bankruptcy.” Debtors who earn more than their state’s annual median income must complete a federal means test; if the formula determines they have disposable cash then they must repay some of their debts over Chapter 13. A Chapter 13 debt repayment plan usually lasts three to five years and allows insolvent people to keep most assets while paying only part of approved debts. No matter what type of bankruptcy filed, each person must fully disclose assets and liabilities and also complete a federally-approved credit counseling session before filing the petition with a local bankruptcy court.
  
  

Credit Reporting

• Each person contemplating this form of debt relief should keep in mind that under federal law negative credit reporting results from the act of filing bankruptcy. Chapter 7 cases negatively impact credit for 10 years, while Chapter 13 harms credit for 7 years, according to Experian.
  
  

Required Hearings

• You must attend a 341 meeting of creditors and a discharge hearing to finalize any type of individual debt relief case. The 341 meeting allows creditors to object to your bankruptcy if they so choose, though such actual occurrences are extremely rare. As long as you didn’t commit some type of fraud to get credit or lied on bankruptcy paperwork, your 341 and discharge hearings should run smoothly.
  
  

Excluded Debts

• You can’t eliminate child support, alimony, most taxes, court fines and most student loan obligations through bankruptcy, according to the federal government website Control Your Credit. You can only include tax bills that are at least three years overdue, according to the book “How to File for Chapter 7 Bankruptcy.” Also, federal student loan obligations can rarely be discharged or reduced under individual bankruptcy rules. Rare exceptions would require compelling evidence that your permanent disability makes it unreasonable for the government to expect repayment or a situation such as your college going out of business.