There are quite a few causes that are related to financial troubles. Some common reasons include overwhelming debt, sudden illness, divorce, home foreclosure, or sudden unemployment.

In fact, the average credit card debt in Delaware is a whopping $5,726 per person. In addition, foreclosure rates are also as staggering, one out of every 744 DE homes are currently in foreclosure.

If you can relate to the scenarios above, then you are more than likely facing other personal issues that come with dealing with debt. The fear of losing your vehicle, house or your money can drain a person mentally & physically. You may have even considered Filing Chapter 7 or Chapter 13 Bankruptcy .

If you are thinking “Is Bankruptcy Best For Me?” you are certainly not alone. Almost 1 million people file bankruptcy each year in the United States. Bankruptcy is a tool created by the US Government to help struggling Americans find relief from unpayable debt. You may want to think about bankruptcy relief if it’s best for you.

What Is Bankruptcy?

Bankruptcy gives people the opportunity to get out from underneath considerable debt while still working with lenders in a legal capacity. It is started by a person filing a Petition with their nearest bankruptcy court. The Petition can be filed by a person or married couples jointly. When the bankruptcy is over, the filer will ‘exit’ and will have a chance for a fresh start on their finances.

Throughout the bankruptcy, a trustee is appointed to oversee the particulars of the matter. His or her duties will vary and depend on whether the individual has filed for Chapter 7 or Chapter 13 bankruptcy.

Did you know that Delaware ranks #28 in the nation for bankruptcy filings. In 2017 the number of personal bankruptcies was approximately 257 out of every 100,000 residents.

What Is The Difference Between Chapter 7 And Chapter 13?

People in Delaware, who claim bankruptcy, can choose to file under Chapter 13 or Chapter 7 of the U.S. Bankruptcy Code. What is the difference? Look below for more information

Chapter 7

The trustee of the bankruptcy will liquidate the assets, such as cars, homes, and other property of value in a Chapter 7 Bankruptcy proceeding, In exchange for dissolving all past due debts.

Debtors that were listed on the bankruptcy filing will be repaid with the proceeds collected during liquidation

Chapter 13

If you have the means to pay some of your debts, a chapter 13 bankruptcy plan may work for you. The individual will be allowed to keep his or her valuable assets over a 3- to 5-year period.

In order to determine which chapter an individual can file, they will have to determine their ability to repay under the Bankruptcy Means Test.

What Is A Bankruptcy Means Test?

The ultimate goal of the Bankruptcy Means Test is to determine who is eligible to apply for debt forgiveness through a Chapter 7 Bankruptcy. It takes into account your:

  • income and expenses
  • household size and composition
  • debt-to-income ratio

If you do not qualify for Chapter 7 bankruptcy, you will be able to file for Chapter 13, as above-described.

What Are Bankruptcy Exemptions?

Specific states have certain exclusions that are enacted by congress as federal bankruptcy exemptions for filers. These exemptions will determine what you are able to retain throughout and after Chapter 7. In a Chapter 13 situation, the exemptions will determine what amount you will have to pay certain financial institutions in your repayment plan.


Total exemptions (not including retirement plans and principal residence) may not exceed $25,000 for a single person; $50,000 for husband & wife.


  • Real property or a manufactured home that is the primary residence up to $125,000 in 2012; $125,000 for working or married persions where one spouse is 65 or older (spouses may not double). Property held as tenancy by the entirety may be exempt against debts owed by only one spouse.

Personal Property

  • Clothing, including jewelry; books; family pictures; piano; leased organs; sewing machines; burial plot; church pew or any seat in public place of worship.  
  • College investment plan account (whichever is more; limit of $5,000 for one year prior to filing or the average of the past two years’ contributions) or Delaware ABLE account.
  • Principal and income from spendthrift trusts.


  • 85% of earned but unpaid wages.


  • 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).  
  • IRAS and Roth IRAs to $1,283,025, including inherited IRAs (in most states, inherited IRAs are not exempt).
  • Police officers.
  • Volunteer firefighters.
  • State employees.

Public Benefits

  • Workers’ compensation.
  • Unemployment compensation.
  • General assistance; aid to aged, blind and disabled.
  • Crime victims’ compensation.
  • Fireman’s Disability Benefit

Tools of Trade

  • Tools, implements and fixtures, up to $75 in New Castle and Sussex counties, and up to $50 in Kent County.
  • Vehicles and/or tools of trade that are necessary for employment up to $15,000 each.


  • Life insurance proceeds.
  • Health or disability benefits.
  • Group life insurance policy or proceeds.
  • Annuity contract proceeds up to $350 per month.
  • Life insurance proceeds if policy prohibits use to pay creditors.
  • Fraternal benefit society benefits.


  • $500 of any  personal property if head of family (except tools of trade).

Want to know if you can include Student Loans in Bankruptcy or Medical Bills in Bankruptcy? Check out our Bankruptcy FAQ’s section.

Filing Bankruptcy Alone vs. Filing With An Attorney

Current laws do not require filers to hire a lawyer to declare bankruptcy relief. People are allowed to represent him or herself as a pro se debtor. You will simply contact the local bankruptcy court and obtain all forms and requirements directly through them. Filing alone is not for the faint of heart.

Filing Bankruptcy without an Attorney

A basic Chapter 7 proceeding that doesn’t have a lot of debtors or assets may be easy to manage on your own.

A basic bankruptcy that doesn’t require an attorney might look like:.

  • Your income is below the state median;
  • You have no property;
  • Your debts will be considered dis-chargeable.

Working With An Attorney

Most of the time, it is usually in one’s best interest to work with a bankruptcy attorney. A bankruptcy lawyer is there to represent you and not the creditors.

An attorney is also accustomed with exemption laws. Plus, they can come up with creative strategies to keep your assets through practical repayment strategies that are fair to everyone involved.

While you may have the fight and ability to manage a Bankruptcy on your own, it tends to make things a lot easier on an already stressful situation, especially when there is so much at stake.

What Does Bankruptcy Include?

Once you file for bankruptcy in DE, the courts put in place an order called an Automatic Stay. This order will stop debt collection calls, wage garnishments, and additional claims. Keep in mind that payments regarding child support and criminal cases will still need to be made during this time.

In any event, Bankruptcy will be able to include:

  • credit card debt
  • protection from eviction
  • avoidance of foreclosure
  • utility bills
  • medical expenses

Again, unless you are filing a complex Chapter 13 case, you will lose all assets associated with a Chapter 7 Bankruptcy protection. You will, however, be able to prevent any and all collections from occurring as long as they were incurred before the date of filing and discharge.

Final Thoughts And Considerations On Filing For Bankruptcy In Delaware

As you can see, there a lot of information associated with successfully filing for bankruptcy and then exiting it unscathed or satisfied. Only a licensed bankruptcy attorney can guide you through this arduous process, particularly when it comes to complex cases. Be sure to hire someone you respect and trust.

Bankruptcy Courts In Delaware


Additional Delaware Resources

Foreclosure Help Program

Disability SSDI Benefits