Can you keep your home when you file for bankruptcy?

Many people who struggle with mounting debt do not consider filing for bankruptcy because they worry about losing their property. In fact, you can keep many assets when you file for Delaware bankruptcy, including equity in your home.

Review the common bankruptcy exemptions in Delaware if you are seeking solutions for your debt.

Home and vehicle exemptions

You can keep up to $125,000 of equity in a home you use as your primary residence, including but not limited to manufactured homes.

If you drive to work or otherwise need a car for employment, you can retain a personal vehicle with equity totaling $15,000.

Other personal property exemptions

Additional exemptions available in Delaware include:

  • A $25,000 wildcard exemption that can protect any asset of your choice
  • Proceeds of a life insurance policy
  • Benefits received for workers’ compensation
  • Eligible pensions and retirement plans

These exemptions apply to both Chapter 7 and Chapter 13 bankruptcies. To qualify to file for Chapter 7, you must have fewer assets than those allowed under the exemptions and you must pass the means test. The means test compares your income and expenses to those income and expense of similar household sizes in your area. The bankruptcy court uses this metric to see whether you can afford to repay all or part of your debt.

If you do not pass the means test or want to retain more assets than the allowed exemptions, you may file for Chapter 13 bankruptcy. This process reorganizes your debt into an affordable payment plan.