Delaware Bankruptcy Exemptions — What You Keep

Exemptions are the legal rules that determine what property you can keep when you file for bankruptcy. In Delaware, exemptions are critically important because they define the line between protected and at-risk assets §10-4914.

Delaware requires use of state exemptions only — federal bankruptcy exemptions under §11 U.S.C. § 522(d) are not available. This means the specific Delaware exemption amounts below control what you can protect.

Homestead §10-4914

$200,000 in equity in a principal residence. Equity in real property or in a manufactured home that is the debtor's principal residence is exempt up to an aggregate $200,000, with a total of $200,000 for the residence in a joint case. The exemption is unavailable for debts arising from securities law violations, fiduciary fraud, or certain criminal acts or intentional torts. This protects equity in your primary residence — if your home equity is within this limit, you keep the house in bankruptcy.

Personal property §10-4914

$25,000 aggregate in personal property and/or equity in real property other than the principal residence (bankruptcy or insolvency). In a federal bankruptcy or state insolvency proceeding, Sec. 4914(b) lets a Delaware-domiciled individual debtor exempt personal property and/or equity in real property other than the debtor's principal residence having an aggregate fair market value of not more than $25,000. In a joint case the allowance applies separately to each debtor, not to exceed $25,000 each. Outside bankruptcy or insolvency, Sec. 4902 exempts only enumerated articles (family Bible, school books and family library, family pictures, a church pew, a burial lot, wearing apparel) plus limited trade tools. This covers household goods, furnishings, clothing, and everyday personal items.

Vehicle §10-4914

$25,000 for a vehicle necessary for purposes of employment under Sec. 4914(c)(2), in addition to the Sec. 4914(b) aggregate exemption. This protects equity in your car — meaning the value of the vehicle minus what you owe on it.

Wages §10-4913

85% of earned but unpaid wages. This applies to wages already earned but not yet paid at the time of filing.

Wildcard §10-4903

$500 in other personal property selected by the debtor, available only to a head of a family and not to merchantable goods bought to be sold in the debtor's regular business. A wildcard exemption can be applied to any property not fully covered by other exemptions.

Retirement accounts §10-4915

ERISA-qualified plans, IRAs, and state and local retirement funds are exempt. Retirement accounts receive strong protection in bankruptcy — both under state law and federal law §29 U.S.C. § 1056 (ERISA).

Tools of trade §10-4902

tools, implements, and fixtures necessary for carrying on a trade or business, not exceeding $75 in New Castle and Sussex Counties and $50 in Kent County (in bankruptcy or insolvency, Sec. 4914(c)(2) separately allows up to $25,000 for tools of the trade necessary for purposes of employment). This protects the equipment you need to earn a living.

• In Chapter 7, non-exempt property can be liquidated by the trustee. High exemptions mean you keep more.
• In Chapter 13, the "best interests of creditors" test means your plan must pay unsecured creditors at least what they would have received if non-exempt assets were liquidated in Chapter 7. Higher exemptions can reduce your required plan payment.

• Is your home equity within the homestead limit, or does it exceed the cap?
• Do you have a vehicle loan that reduces your equity below the exemption?
• Are there assets that could be reclassified or converted to exempt form before filing?
• Would waiting to file change the exemption calculation (e.g., recent large deposit, bonus, tax refund)?