Bankruptcy is a federal law, which means that though specifics vary by state, a few factors stay the same. No matter which state you live in, there are two main kinds of individual bankruptcy that you might file. In Chapter 7 bankruptcy, your assets (like your house) are sold to pay your creditors. In Chapter 13 bankruptcy, your payments are reorganized in order to make paying back your debts more manageable. Living in Delaware has several impacts on bankruptcy.
Where to File for Bankruptcy
Delaware has only one district, located in Wilmington . If you live in Delaware, you must file for bankruptcy in the district of Delaware, but that does not necessarily mean that you need to travel to Wilmington in order to file, often you can hold a meeting with your trustees locally.
Key Points About Chapter 7 Bankruptcy
You are only allowed to file Chapter 7 bankruptcy if your average monthly income is less than the median income of other Delaware residents; if you make the same or more than Delaware's median income, you aren't eligible to file Chapter 7 unless you pass a stringent means test. For example, the average yearly income for a Delaware single earner is $49,566, or about $4,130 per month, so you must make less than $4,130 a month in order to qualify for Chapter 7 bankruptcy.
How Long Your Chapter 13 Plan Will Take
If your average monthly income is less than Delaware's median income, then your reorganized payment plan according to Chapter 13 bankruptcy cannot be more than 36 months long, unless the bankruptcy court finds that good cause exists to extend the plan up to a maximum of 60 months. If your average monthly income is greater than or equal to Delaware's median income, then your Chapter 13 repayment plan generally must be 60 months in length.
Exemptions Available in Delaware
Exemptions are assets that you are allowed to exclude from the bankruptcy. Federal exemptions are not available in Delaware. Items eligible for Delaware state exemptions can include tools of the trade (vehicles or equipment necessary for employment), personal property (clothing or family heirlooms), homestead exemptions (the primary residence) and other exemptions.
If you bought your house less than 40 months ago, the amount you can claim for your homestead exemption can't exceed $146,150 (unless you bought it with money you got from selling another house in the same state). If you have lived in your state for less than two years before filing for bankruptcy, then you will use the exemption laws of the state where you lived most during the six months before the two-year period preceding your bankruptcy filing.
Using a Deleware Bankruptcy Lawyer
This article provides an ntroduction to Bankruptcy issues in Delaware. For more detailed, specific information, please contact a Delaware bankruptcy lawyer.