Exemptions are the assets that individuals are permitted to keep when they file Bankruptcy. These are the things that neither the court or creditors are permitted to take from you. Delaware has a very generous list of exemptions. The highlights include:
$125,000 of equity in your home. If your house is worth $200,000.00, but you have a $150,000 mortgage there is $50,000 of equity. All of the equity in your home can be exempted, and they cannot take your home as long as you keep up with your mortgage. However if the same house worth $200,000 only has a $25,000 mortgage, then there is $175,000 of equity in the home. Applying the $125,000 exemption against the $175,000 of equity, there is still a $50,000 of unprotected equity in the home, and the Bankruptcy Court could potentially sell your home, give you the first $125,000 in cash from the sale, and use the rest to pay your creditors.
$25,000 "wild card" exemption. This can be almost anything -- furniture, bank accounts, golf clubs, personal injury claims, inheritances, life insurance, season tickets to the Flyers. If you are married and you are filing jointly, the exemption is doubled to $50,000.
$15,000 equity in a car or tools of the trade. Like the equity in your home, this is the excess after you deduct any car loan. There is rarely any equity in newly-purchased car, but if you owe $5,000 on a car that is worth $7,500, there is $2,500 of equity. Like the “wild card” exemption, if you are married and filing together, each individual gets a $15,000 exemption.
There are other exemptions in Delaware ranging from the important (pensions & retirement) to the obscure (church pews & pianos), so it is best to consult with a Delaware bankruptcy attorney on these matters. Also, there’s a residency requirement to be eligible for these for Delaware exemptions, so if you haven’t lived in Delaware continuously for the past two years, talk to a Delaware bankruptcy attorney to know your rights.