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.
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.
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.
Married couples filing together in Delaware can double the exemption amount for any property in which both spouses have an ownership interest.
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.
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.
Up to $15,000 of equity in a motor vehicle, if necessary for your employment. Del. Code Ann. tit. 10, § 4914
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 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
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.
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.
85% of unpaid wages. Del. Code Ann. tit. 10, § 4913
Delaware college investment plan accounts or Delaware ABLE accounts. Del. Code Ann. tit. 10, § 4916
Unemployment compensation benefits. Del. Code Ann., tit. 19, § 3374
Workers’ compensation benefits. Del. Code Ann. tit. 19, § 2355
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
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.