Bankruptcy in Delaware
Delaware follows federal bankruptcy law, but it applies its own set of exemptions. These rules determine what property you can protect, such as your home, car, or retirement accounts, during bankruptcy. Choosing the right chapter and applying the correct exemptions can make a major difference in your outcome.
You don’t have to go through this process alone. A qualified Delaware bankruptcy attorney can help you explore your options, understand what’s at stake, and file with confidence.
Types of Bankruptcy in Delaware
Bankruptcy is a legal process that allows individuals and businesses in to eliminate or restructure debt when repayment is no longer realistic. It’s designed to provide a fresh start by clearing away certain financial obligations and stopping collection efforts.
To qualify, you must show that a genuine hardship prevents you from keeping up with your financial responsibilities. However, some debts—such as child support, alimony, most student loans, and certain taxes—are generally not dischargeable.
If you’re struggling to keep up with mounting bills, bankruptcy may be a viable path forward. The most common options are Chapter 7, Chapter 11, and Chapter 13. Each chapter serves a different financial profile, and choosing the right one requires a careful look at your situation.
In Delaware, all bankruptcy cases are handled by the United States Bankruptcy Court for the District of Delaware, located in Wilmington. This court oversees Chapter 7, 11, and 13 filings for individuals and businesses across the state.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy is often a practical option for individuals in who need a clean financial slate. It can wipe out many unsecured debts and offer a way to reset after financial hardship. But before you file, it’s important to take a close look at your income, expenses, and overall ability to repay.
Most people who qualify for Chapter 7 have experienced a drop in income or financial changes that make it impossible to manage their debts. While the process can discharge what you owe, you may need to give up certain assets, including your vehicle, home equity, or valuable personal property.
The means test is the first step in determining whether you qualify for Chapter 7 bankruptcy. It compares your average monthly income over the past six months to the median income for a household of your size in your state. If your income falls below the median, you typically qualify automatically.
If it’s higher, you’ll need to complete a more detailed calculation that subtracts certain allowed expenses to determine how much disposable income you have left. If that amount is too high, you may be required to file under Chapter 13 instead.
As of 2025, the median income levels in Delaware are as follows:
- 1-person household: $72,804
- 2-person household: $92,178
- 3-person household: $104,376
- 4-person household: $125,676
For households larger than four, add $11,100 for each additional person.
Chapter 11 Bankruptcy
Chapter 11 bankruptcy is a more involved process, typically used by businesses or individuals with substantial assets or complex financial situations. It allows you to reorganize your debt through a court-approved repayment plan—usually spanning four to 18 months—so payments become more manageable over time.
Chapter 11 doesn’t require you to liquidate your property to pay creditors. Instead, it gives you the chance to negotiate new terms with your creditors.
Filing for Chapter 11 bankruptcy in Delaware requires detailed documentation and strict adherence to court rules. You must file your case with the U.S. Bankruptcy Court for the District of Delaware and submit a series of forms that provide a full picture of your financial situation.
These documents help the court and your creditors evaluate your case and any proposed repayment plan. Required filings include:
- Voluntary Petition (Official Form 101)
- Schedules A/B through J (detailing assets, liabilities, income, and expenses)
- Statement of Financial Affairs (Official Form 107)
- Creditor Matrix (list of all creditors with contact information)
- Disclosure of attorney compensation
- Business financial statements, including a balance sheet, income statement, and cash flow statement
- Proposed reorganization plan (filed during the case)
Chapter 13 Bankruptcy
Chapter 13 bankruptcy, often called a wage earner’s plan, allows individuals in to reorganize their debt without giving up their property. After you file, the court appoints a trustee to review your income, debts, and assets to determine how much you can reasonably afford to repay.
Instead of wiping out debt through liquidation, you’ll follow a structured repayment plan—usually lasting three to five years—based on your income and the assets you want to protect.
The filing process is also more involved. You’ll need to submit a detailed repayment proposal, which the court and a trustee must review and approve. Once the plan is in place, you’ll make regular monthly payments to the trustee, who distributes the funds to your creditors.
Staying current on both your plan and new financial obligations is essential. While Chapter 13 takes longer than Chapter 7, it offers stronger protections and a structured path to rebuild your finances while keeping your assets in place.
The Bankruptcy Process in Delaware
There’s rarely a perfect time to file for bankruptcy, but if your debt load is more than you can realistically repay within five years, it may be time to take action. Bankruptcy can stop collection efforts, protect your assets, and give you the structure you need to move forward with a clean financial slate.
To begin the process in , you’ll need to gather complete financial records. That includes your monthly expenses, total debts, income, and a list of your assets. The court relies on this information to assess your eligibility and determine the best path for your case. If anything is missing or inaccurate, your petition could be delayed—or denied entirely.
In Delaware, the bankruptcy process follows federal law, but the state requires you to use its exemption system instead of the federal one. These exemptions play a critical role in determining what property you’re allowed to keep, especially in Chapter 7 cases.
Delaware’s key exemptions include:
- Homestead exemption: Up to $125,000 in equity in your primary residence
- Vehicle exemption: Up to $15,000 in equity in one motor vehicle
- Tools of the trade: Up to $75,000 in value for tools or equipment used in your occupation
- Household goods and furnishings: Up to $5,000 in value
- Wages: A portion of earned but unpaid wages may be protected
- Public benefits: Fully exempt, including Social Security, unemployment, and disability benefits
- Retirement accounts: Most tax-deferred retirement accounts are fully protected
Work With an Experienced Delaware Lawyer
If you’re facing overwhelming debt in Delaware, bankruptcy may be the path that helps you regain financial control. Whether you’re considering Chapter 7, 11, or 13, understanding how Delaware’s exemption laws and court procedures apply to your case is essential to protecting your assets and making informed decisions.
You don’t have to go through this alone. A qualified Delaware bankruptcy attorney can walk you through your options, ensure your paperwork is accurate, and guide you through every step of the process.
Submit a request online or call us today at (866) 345-6784 to speak with an experienced lawyer in your area!
About the Author
Aaron is a professional legal writer with a B.S. in English Education from Southern Illinois University – Carbondale. He has written, published, and edited thousands of legal articles for RequestLegalHelp, which has connected over 5 million people to legal help in the United States.
With over five years of experience writing thousands of legal articles for law firms across the U.S. and Canada, Aaron specializes in covering federal, state, and city-level legal issues ranging from auto accidents to wrongful terminations.
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