What assets can you keep after you declare Chapter 7 bankruptcy?


Declaring Chapter 7 bankruptcy can feel overwhelming, but understanding which assets you can keep may provide some relief. This guide breaks down the key exemptions in Delaware, helping you retain what matters most during the bankruptcy process.

Essential personal property

You can keep your personal belongings, such as clothing, furniture, and household appliances. These items are necessary for daily living and protected under bankruptcy exemptions.

Home equity protection

Many people worry about losing their homes while going through bankruptcy. In Chapter 7, you can often keep your house if you have significant equity. In Delaware, bankruptcy laws allow you to protect up to $200,000 of equity in your primary residence. This exemption applies to any real property or manufactured home that serves as your principal residence. Unlike some states, Delaware does not double this exemption for married couples filing jointly.

Vehicles

You can protect up to $15,000 of equity in your car or other vehicles. This means that as long as the value of your vehicle, minus any loans you owe, does not exceed $15,000, you can keep it during your bankruptcy. Keeping your vehicle ensures you remain mobile and can continue to work. If the car has more than $15,000 of equity, it is likely you can still keep it by using additional exemptions allowed as personal property.

Retirement accounts

Retirement savings, like 401(k)s and IRAs, are typically safe in Chapter 7 bankruptcy. Delaware protects most tax-exempt retirement plans, including defined benefit plans and state employee pensions. Additionally, you don’t have to give up public benefits such as Social Security, unemployment compensation, and workers’ compensation. Educational savings plans also fall under these exemptions.

Tools of the trade

If you own tools or equipment necessary for your job or business, you can usually keep them. Whether you’re a service worker, freelancer, or contractor, maintaining your work tools means you can continue earning an income after bankruptcy.

Wildcard exemptions

You’ll also get a $25000.00wildcard exemption that you can apply to any property you choose. This flexibility allows you to protect additional items that hold personal or practical value. This exemption is doubled for married couples filing jointly.

Dealing with Chapter 7 bankruptcy can be confusing and stressful, but knowing which assets you can keep helps you plan for the future. Thankfully, you don’t have to sacrifice your essentials to achieve financial relief.