Bankruptcy

Delaware Bankruptcy Exemptions

If you are a resident of the state of Delaware and the court has declared you bankrupt under chapter 7 of the bankruptcy code, you are legally entitled to Delaware bankruptcy exemptions. But, it is very important for you to keep in mind that Delaware is one of those states that do not allow the debtors to use federal list of exemptions in place of state-specified exemptions. However, certain federal supplemental exemptions can be used in addition to the exemptions allowed by the state of Delaware.

Wildcard

You can exempt up to $500 of any personal property (excluding tools of trade) in addition to the specific exemptions allowed on those properties.

Wages

85% of earned but unpaid wages are exemptible under the bankruptcy laws applicable in the state of Delaware.

Tools Of Trade

If a vehicle, including car and motorcycle, is needed for your employment, you can get it exempted in the category of “tools of trade”; the maximum limit is $15000 per debtor. Fixtures, implements, and tools are also exemptible up to $50 in Kent County and up to $75 in Sussex and New Castle counties.

Public Benefits

Delaware bankruptcy exemptions also allow you to exempt 100% of certain types of public benefits, such as aid for the blind, disability and aged benefits, general assistance payments, unemployment compensation benefits, workers’ compensation benefits, and crime victim compensation.

Personal Property

Personal properties that can be exempted include Pianos and leased organs, Sewing machine, Clothing and jewelry, Church pew, Burial plot, Spendthrift trust principal and interest, and books, Bible, and family pictures. The maximum limit is $25,000 (in total) per debtor. It means there are no individual limits. You can get any personal property (as mentioned) exempted up to the personal property exemption limit. It is just that the total value of exemption must not exceed $25000 in total in this category. College investment plans are also exemptible for either up to the average of the contributions made in the last two years or up to $5,000 for the year prior to bankruptcy filing, whichever is higher.

Pensions

As per the laws regarding Delaware bankruptcy exemptions, you can keep 100% of certain types of pensions that include state employee pensions, volunteer firefighter pension, police officer pensions, Kent county employee pensions, and federal pension exemptions.

Insurance

In this category, 100% exemptions are allowed for fraternal benefit society benefits, group life insurance proceeds/policy, disability or health benefits, and life insurance avails (or proceeds). The Delaware bankruptcy laws also allow you to exempt a maximum value of $350 per month in annuity proceeds. In order to get 100% exemption for life insurance proceeds, there must be a specific clause in the policy contract that prohibits the use of proceeds to pay off creditors.

Homestead

Any residential property that includes manufactured home or any real property can be exempted up to a maximum value of $50000. Here, it is important to note that the limit for Delaware bankruptcy exemptions for homestead properties does not get double if the bankruptcy petition has been filed jointly by a married couple.


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Posted in Bankruptcy, Bankruptcy Exemptions | 2 Comments »

2 Responses to “Delaware Bankruptcy Exemptions”

  1. Dennis says:

    Very clearly defined. State of Delaware provides some exemptions under chapter 7 Bankruptcy code. But it will not give you the option of selecting one between the state specific exemptions and federal list of exemptions; you can use some federal supplemental exemptions with your Delaware exemptions. Delaware provides you with wild card exemptions up to restricted limit on personal property. Unpaid wages are exempted 85 % not 100% in Delaware. Tools of Trade are also specified in the list of exemptions up to some certain limit. Some selected pensioners can keep their pension 100% exempted like volunteer fire fighter pension, police officer pensions etc. Delaware State exempts group life insurance, health benefits or disability etc up to 100%. If the policy has a clause of prohibiting its use in case of bankruptcy, it will be exempted 100%. Delaware is not going to give you double exemptions in the case of homestead for a married couple. Residential property will be exempted up to a certain limit only. Delaware is some what strict with its exemptions so it becomes difficult to get more exemptions here. If you are the resident of Delaware, you should be aware of this article

  2. John says:

    State of Delaware provides some exemptions under chapter 7 Bankruptcy code. But it will not give you the option of selecting one between the state specific exemptions and federal list of exemptions; you can use some federal supplemental exemptions with your Delaware exemptions. Delaware provides you with wild card exemptions up to restricted limit on personal property. Unpaid wages are exempted 85 % not 100% in Delaware. Tools of Trade are also specified in the list of exemptions up to some certain limit. Some selected pensioners can keep pension 100 % exempted like volunteer fire fighter pension, police officer pensioners etc. Delaware State exempts group life insurance, health benefits or disability etc up to 100 %. If the policy has a clause of prohibiting its use in case of bankruptcy, it will be exempted 100 %. Delaware is not going to give you double exemptions in the case of homestead for a married couple. Residential property will be exempted up to a certain limit only. Delaware is some what strict with its exemptions, so it becomes difficult to get more exemptions here.

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