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Bankruptcy in Delaware

Did you know that 5 people who signed the U.S. Constitution were from Delaware? Did you know that bankruptcy law provisions were drafted into the Constitution?

  • The Delaware signers to the U.S. Constitution were George Read; Gunning Benfer, Jr.; John Dickinson; Richard Bassett; and Jacob Broom.
  • Article I, Section 8, Clause 4, United States Constitution provides, “[t]he Congress shall have Power [t]o establish… uniform Laws on the subject of Bankruptcies throughout the United States”

If you’re a Delaware resident, considering bankruptcy or you are in financial distress, this article is for you.

How Delaware Bankruptcy Law Differs from the Laws of Other States

“Exemptions” protect your assets when you file bankruptcy and Delaware’s bankruptcy exemption laws are unique.

In other words, you can keep certain property even if you file bankruptcy. For example, you can keep:

  • Home equity up to $125,000.
  • Any other assets up to $25,000.

These exemptions are doubled if a married couple is filing jointly and retirement accounts are not included in the limit.

Many people keep all of their assets, so long as they can afford to make the payments.

Your Choices in Filing Bankruptcy in Delaware: Chapter 7 or Chapter 13

90% of Delaware residents, who filed bankruptcy in 2011, filed under Chapter 7.

  • Chapter 7 discharges some unsecured debts such as credit cards and medical bills.
  • You can keep any assets covered by exemptions; extra assets are sold to pay off creditors.
  • The process takes about 6 months.

10% of Delaware residents, who filed bankruptcy in 2011, filed under Chapter 13.

  • Chapter 13 calls for the reorganization of debt, though some debt may be discharged.
  • You can keep any assets you can continue to pay for.
  • The process takes 3 to 5 years because much debt is repaid.

To file under Chapter 7, you must pass the “means test”; if you don’t qualify or Chapter 7 is not appropriate because of high non-dischargeable debt, Chapter 13 is the most commonly chosen alternative.

How to Find and Select a Bankruptcy Attorney

The best way to find an attorney is to get a personal referral. As an alternative, look for an attorney who focuses his or her legal practice on bankruptcy by searching for “Find a Delaware Bankruptcy Attorney” or by calling the bar association. Most bankruptcy attorneys will offer a free, no obligation consultation or phone interview so you can determine whether that attorney is a good fit for you.

How to Prepare to Work with a Bankruptcy Attorney

Your bankruptcy lawyer will only be able to guide you through your bankruptcy proceeding and give you expert advice if he or she has all of your financial information including assets, income, debts, and any repayments you’ve already made.

Collect it all and ask your bankruptcy attorney if you have questions. That’s what he or she is there for. It is a lot of work but, you can do it; a fresh start will be worth the effort.

If you get discouraged at any time along the way, remember that our Founding Fathers made bankruptcy laws to protect you and others in your exact situation.

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