Can I pick and choose which debts to include in bankruptcy?

Generally no. In bankruptcy, all creditors of a certain class must be treated equally. To do otherwise shows an unfair preference to a group of creditors at the expense of other creditors. There are, of course, distinctions by class. You can’t file against non-dischargeable debts like taxes, child support, and student loans. You will notice that your attorney will still list these debts on your bankruptcy schedules, and this is done for mandatory disclosure requirements.
In chapter 7, your unsecured debts – credit cards, medical bills, personal loans, and the like – will all be discharged. In Wisconsin, we have case law (In re: Guseck) which indicates that debts are discharged, even if they are left off of your schedules. This works to the debtor’s advantage when they simply lose track of all their bills and neglect to add one before they file.
The only real picking and choosing you get to do in Chapter 7 is on secured debts. You can choose to retain property and reaffirm on the debt. Alternatively, you can surrender property and have the deficiency balance discharged. In Chapter 13, we can be slightly more creative and treat creditors differently for a variety of reasons – but only to a limited extent. The rules in Chapter 7 generally apply to Chapter 13 as well.
Many debtors complain that they don’t want to include certain debts. Usually, this is because it is a debt owed to a professional that the debtor wishes to maintain a future business relationship with – most commonly doctors, attorneys, and auto mechanics. However, these creditors are ordinarily unsecured creditors, just like credit cards. They must be listed on schedules and given notice of the bankruptcy, and their debts legally discharged. If you make payments to these creditors prior to filing for bankruptcy, they will constitute a preferential payment which can be recovered by the Trustee by lawsuit and re-distributed to all unsecured creditors.
Although these creditors have no legal right to pursue you for the debts you discharged, you are permitted by statute to pay the debt back voluntarily after your discharge has been issued.

How are debts classified?

As a practical matter, I classify debt differently depending on whether I am explaining the effect of Chapter 7 or Chapter 13 to my clients.
Chapter 7
Secured Debts – debts that are secured to property that you own. Examples include mortgages, auto loans, and sometimes loans for furniture, appliances, or jewelry. In Chapter 7, you have the option of keeping the property and reaffirming the debt. Alternatively, you can surrender the property and discharge the debt.
Non-Dischargeable Debts – debts that will not be discharged in bankruptcy. Examples include tax debts, other debts owed to a government unit (including fines, tickets, and criminal restitution), student loans, and domestic support (alimony, maintenance, or child support).
Unsecured Debts – these are debts that are generally presumed to be discharged, and retain no lien against your property. Examples include credit cards, medical bills, personal loans, payday loans, civil judgments, past-due utility bills, and deficiencies resulting from repossessions. An unsecured creditor could object to discharge by alleging and proving fraud, abuse, or bad faith.
Chapter 13
Secured Debts – these debts are as I described them above. In this district, debtors continue to make their regular mortgage payments as they come due, but any arrearage is paid within the Plan with no interest. Auto loans, whether in default or not, are paid in full within the plan with we call “Till Interest”. Till Interest varies from time to time and is calculated based on the current prime rate. If the auto is a lease (or if you rent your home), those lease payments are paid separately as they come due like mortgages, and any arrearage is also paid in the Plan with no interest. Other secured debts (furniture, appliance, or jewelry loans) are like auto loans – paid in full within the Plan at Till Interest. Depending on how old the debt is, your secured loan balances (except for mortgages) could be reduced down to the replacement value of the property securing the loan in a process we refer to as cramdown.
Priority Debts – these are a special class of non-dischargeable debts that must ordinarily be paid in full in the Plan, but with no interest. These debts chiefly consist of tax debts from the past four years and domestic support obligations.
Non-Priority Debts – a grab-bag of other non-dischargeable debts and unsecured debts. These debts will be paid at a percentage, ranging from 0% to 100%, depending primarily on your income and ability to pay. They also share in any “floor amount” (these are amounts that are not based on income, but represent a buy-out of what would be a problem in Chapter 7). At the end of your Chapter 13 Plan, the portion of your non-priority debts that are non-dischargeable (student loans, for example) will survive your bankruptcy. All other unsecured debts will be discharged.

What is Bankruptcy? What are the differences between Chapter 7 & Chapter 13?

Bankruptcy is a legally enforceable form of debt relief. The vast majority of cases involve both a stay and a discharge. The stay, which suspends creditor collection efforts and legal actions, goes into effect after your case is filed with the court and remains in effect while your case is pending (barring a motion for relief). A discharge is then issued by the court which will eliminate certain types of debt.
The Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) was adopted into law in October 2005, and established a number of requirements intended to reduce abuse of the bankruptcy system. The key changes resulting from BAPCPA include the requirement of a pre-filing credit counseling course and a post-filing financial management course. In addition, debtors whose gross annual income is computed to exceed the state’s median income level must complete the “Means Test” to calculate their ability to repay debts.
In Chapter 7, the vast majority of your unsecured debts (credit cards, medical bills, payday loans, other personal loans, delinquent utility bills, civil judgments, etc.) are discharged – meaning you are no longer liable for repaying the debt. Certain debts cannot be discharged (like taxes, child support, and student loans). Secured debts, such as mortgages and auto loans, can only be discharged if you are willing to surrender the collateral.
In Chapter 13, your debts are consolidated and a structured repayment plan is proposed over the course of three to five years. Based on the different classifications of debt, some will be paid in full and others will be paid a percentage based on your ability to repay the debt. Interest may be reduced or eliminated completely depending on the class of debt.
Generally, I advise people to file Chapter 7 when possible. Chapter 7s are cheaper, easier, and faster. Chapter 13s are a long-term commitment and require adherence to a strict budget, and because of this, they tend to have a high failure rate relative to Chapter 7s. Nonetheless, some people need to file Chapter 13. Some make too much money, some are attempting to save their home from foreclosure, some filed bankruptcy too recently in the past., and others have too much property that could potentially be seized and sold by the Trustee. For these people, Chapter 13 offers better alternatives to the consequences that would result from a filing under Chapter 7.