Table of Contents
  1. What are the Delaware bankruptcy exemptions?

Delaware calls itself the First State because it ratified the U.S. Constitution before any other state, in early December 1787. In the last century, it has also become first in the minds of many entrepreneurs when deciding where to incorporate their businesses. Today, Delaware is home to more corporations, limited liability companies, and business partnerships than people.

But Delaware’s success in attracting new business formations hasn’t always translated to economic security for its residents. Although the unemployment rate in Delaware by the end of 2016 had fallen to half of its peak during the Great Recession, the last six months have seen it increase from 4.4% to 4.7%.

When Delaware residents find themselves in economic distress, unable to keep up with their debts, many turn to the U.S. Bankruptcy Code for help. The Bankruptcy Code offers debtors several options to help alleviate the heavy burden of accumulated debt. One option that is popular among Delaware debtors is filing bankruptcy under Chapter 7 of the Code.

This post provides basic information about Chapter 7 bankruptcy in Delaware. However, Delaware residents considering whether to file a Chapter 7 bankruptcy petition should consult a knowledgeable Delaware bankruptcy attorney before doing so.

What are the Delaware bankruptcy exemptions?

Unlike some states, which permit bankruptcy debtors to choose between their own exemptions and the federal bankruptcy exemptions defined in the Bankruptcy Code, Delaware requires debtors to use the Delaware state exemptions. That is, Delaware is an “opt-out” state, because it has opted out of the federal bankruptcy exemptions.

Some of the most significant Delaware exemptions are listed below. Most of the exemptions below are limited to a specified value. That value refers to a debtor’s equity in exempt property. Equity is the difference between property’s value and any debts secured by the property.

Example: Jeffrey owns a house in Delaware worth $250,000, but subject to a $175,000 mortgage. Because Jeffrey’s equity in his house is $75,000, he would be able to exempt it from liquidation in a Chapter 7 bankruptcy.

Delaware Bankruptcy Exemptions

The top 5 exemptions under Delaware state law.
Type of exemptionDelaware law
Homestead$125,000, with some exceptions related to law violators
Personal property$15,000 in tools of the trade, all clothing, another $500 in personal property if head of household, plus family pictures and books
Vehicle$15,000, only if the vehicle is necessary for employment
Wages85% earned but unpaid
Pension/retirementRetirement accounts exempt (including rollover contributions for 60 days after distribution), plus several types of pensions

If a person’s equity in otherwise-exempt property is greater than the limit on value, then the case trustee will be able to sell it. However, the trustee would pay the debtor an amount equal to the exemption limit out of the proceeds of that sale.

In addition to the exemption limits described below, Delaware limits the total amount that a debtor can exempt in personal property or real property to $25,000. However, that limit does not apply to retirement plans, the homestead, or a vehicle or tools of the trade necessary for purposes of employment.

When a married couple jointly files bankruptcy, each spouse can claim exemptions up to the exemption limits, except as to their homestead. In other words, the couple can “double” most of their exemptions.


Delaware exempts real property or a manufactured home that is used as the debtor’s principal residence, up to a value of $125,000. However, this exemption is unavailable if the debtor owes a debt arising from:

  • A violation of state or federal securities law;
  • Fraud, deceit, or manipulation in a fiduciary capacity or in connection with the purchase or sale of a security registered under federal law; or
  • Any criminal act, intentional tort, or willful or reckless misconduct that caused serious physical injury or death to another individual in the prior five years.


Del. Code tit. 10, § 4914(c)(2) exempts a motor vehicle to a value of $15,000, but only if the vehicle is necessary for purposes of employment.

Other Personal Property

Various kinds of personal property are exempt under several different sections of Del. Code tit. 10, including:

  • Section 4902: The family Bible, school books, family library, family pictures, a seat or pew in any church or place of public worship, a lot in a burial ground, and all clothing of the debtor and his or her family.
  • Section 4903: If a debtor is the head of a family, he or she can exempt an additional $500 in personal property.
  • Section 4914(c)(2): Tools of the trade necessary for purposes of employment, up to a value of $15,000.
  • Section 4916: Assets held in and proceeds payable under a Delaware College Investment Plan or Delaware ABLE account are exempt to the extent of total contributions permitted under the Internal Revenue Code.


Under Del. Code tit. 10, § 4913, 85% of a person’s earned but unpaid wages are exempt. Wages include salaries, commissions, and other forms of remuneration paid to an employee by his or her employer for labor or services, but do not include payments to a person who is self-employed.

Pensions/Retirement Accounts

Retirement accounts are exempt under Del. Code tit. 10, § 4915. Rollover contributions are exempt for 60 days after distribution if contributed to a new retirement plan within that period.

The Delaware Code elsewhere specifically exempts several types of pensions, including:

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