How Delaware Bankruptcy Laws Affect Your Case
Description: Bankruptcy laws vary from state-to-state with Delaware bankruptcy laws being no exception. Knowing these laws will help you better understand what to expect.
The bankruptcy process is the same across the entire United States, as it is regulated by federal bankruptcy laws. For instance, a person must complete 90 minutes of credit counseling, those filing Chapter 7 must complete a means test to ensure they can file Chapter 7, and the court proceedings must follow the same set of guidelines. One area within the Delaware bankruptcy laws that is different, however, is in the area of how much of your property’s value is exempt from being seized to pay back creditors.
Exemptions mostly apply to Chapter 7, as some individuals will opt for Chapter 13 bankruptcy to keep their assets even if they do qualify for Chapter 7. When filing Chapter 13, a person agrees to pay back all or part of their debts within a 3 or 5 year period. Defaulting on that payment plan can lead to the loss of those assets to satisfy debts.
- The equity in a person’s home or real property is to not exceed $125,000.00, as of 2012.This exemption amount tends to increase each year.
- Your automobile is covered under personal property exemptions up to $15,000.00 if it is used for employment. Overall, a person is allowed to have $25,000.00 in personal property or equity in real property that includes books, photos, Bibles, burial plots, seating in a public place of worship, jewelry, clothing, college investment plan with a contribution limit of $5,000.00 for the year prior to filing bankruptcy, organs and pianos, income and principal of spendthrift trusts, and sewing machines.
- Other property maybe exempt for up to $25,000.00 as long as it is not the debtor’s primary residence. Tools of the trade are exempt up to $15,000.00.
- Delaware bankruptcy laws state that the wage garnishment exemption is 85% of unpaid wages that have been earned.
You will make a list of your assets for your attorney and determine what their depreciated values are. In many Chapter 7 cases, a person is able to keep all of their assets because they do not have much or the values are low.
Lastly, some individuals are entitled to “non-bankruptcy” exemptions that are covered by federal law rather than Delaware bankruptcy laws. These exemptions include civil service benefits, Social Security benefits, veteran’s benefits, and a cap on the percentage of wages that can be garnished. Government benefits and pensions are exempt from being used to pay back debt.