Delaware Bankruptcy Exemptions

The Delaware bankruptcy exemptions help you protect property in Chapter 7 bankruptcy. Find out more.

Updated May 29, 2019

You don’t lose everything when you file for bankruptcy. Delaware’s bankruptcy exemption laws allow you to protect the assets you’ll need to maintain a home and employment. In this article, you’ll find out how Delaware’s bankruptcy exemptions work.

If you need other information, such as the location of your local bankruptcy court, official bankruptcy forms, or means test figures, see How to File Bankruptcy in Delaware.

Using Delaware State Exemptions

Delaware is an “opt out” state, meaning you aren’t permitted to use the federal bankruptcy exemptions when you file a bankruptcy in Delaware. Bankruptcy filers in Delaware can exempt property using the Delaware exemptions only.

Property Not Protected By Delaware's Exemptions

If you can’t cover an asset with a bankruptcy exemption, you might or might not lose it—it will depend on the chapter you file.

  • Chapter 7 bankruptcy. The Chapter 7 bankruptcy trustee will sell the property and distribute the proceeds to your creditors.
  • Chapter 13 bankruptcy. You can keep everything you own in this chapter. However, you’ll pay your creditors the greater of either the value of your nonexempt property or your disposable income over a three- to five-year plan.

Doubling Delaware Exemptions

Married couples filing together in Delaware can double the exemption amount for any property in which both spouses have an ownership interest.

Common Delaware Exemptions

Here are some of the most common exemptions available under Delaware law. When you file a bankruptcy in Delaware, you can exempt a total of $25,000 of any property described below, not including tools of the trade, retirement accounts, and your principal residence.

Delaware’s Homestead or Residential Property Exemption

The homestead exemption protects a certain amount of equity in your home or principal residence. A debtor is allowed to exempt up to $125,000 in real property or a manufactured home that used as a principal residence. Also, any interest that debtor has in a real estate held as a tenant by the entirety is exempt. Del. Code Ann. tit. 10, § 4914

For more details about how the homestead exemption works in Delaware, see The Delaware Homestead Exemption.

Delaware’s Motor Vehicle Exemption

Up to $15,000 of equity in a motor vehicle, if necessary for your employment. Del. Code Ann. tit. 10, § 4914

Delaware’s Wildcard Exemption

The head of household can protect an additional $500 worth of any other personal property, except tools of the trade. Del Code Ann. tit. 10, § 4903.

Life Insurance

Life insurance proceeds, group life insurance policy or proceeds, and life insurance proceeds if the policy prohibits using them to pay creditors. Del. Code Ann. tit. 18, § 2725, 2727, 2729

Personal Property

Family bible and books, family pictures, pew or seat in a place of public worship, burial plot, and you and your family’s clothing. Sewing machines and pianos for personal use.

Pension, Retirement, and Life Insurance Benefits

Amounts payable under retirement plans, annuities, and insurance contracts. Del. Code Ann. tit. 10, § 4915

Police officers’ pensions. Del. Code Ann. tit. 11, § 8803

State employees pensions. Del. Code Ann. tit. 29, § 5503

Volunteer firefighters’ pensions. Del. Code Ann. tit. 16, § 6653

You can also protect tax-exempt retirement accounts, including 401(k)s, 403(b)s, profit-sharing and money purchase plans, SEP and SIMPLE IRAs, and defined-benefit plans (11 U.S.C. § 522(b)(3)(C).) Learn more about retirement accounts in bankruptcy.

Wages

85% of unpaid wages. Del. Code Ann. tit. 10, § 4913

Educational Savings Plans

Delaware college investment plan accounts or Delaware ABLE accounts. Del. Code Ann. tit. 10, § 4916

Unemployment Compensation

Unemployment compensation benefits. Del. Code Ann., tit. 19, § 3374

Workers’ Compensation

Workers’ compensation benefits. Del. Code Ann. tit. 19, § 2355

Tools of the Trade

Tools necessary for your business up to $15,000 (but not to exceed $75 in New Castle and Sussex Counties or $50 in Kent County—check these figures with a local bankruptcy lawyer). Del. Code Ann. tit. 10, §4902

Confirming Delaware’s Bankruptcy Exemptions

Unless otherwise noted, all references are to the Delaware Code Annotated. Delaware’s exemption amounts adjust periodically. To make sure you have the most recent figures, be sure to check for any updates at the official website of the Delaware Code.

Although this article provides essential information, it isn’t an all-inclusive overview. Consider purchasing a detailed self-help book such as How to File for Chapter 7 Bankruptcy by Cara O’Neill and Albin Renauer J.D. for more details or seek advice from a local bankruptcy attorney.

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