Chapter 7 Bankruptcy Delaware: 3 Things You Need to Know

If you're dealing with tough financial challenges, understanding your options can feel overwhelming without the right resources. We've put together this article to assist those facing similar circumstances. If you're contemplating Chapter 7 bankruptcy in Delaware, here's what you should know before taking the plunge:
Information in this article does not constitute legal advice, it is for informational purposes only, and may not constitute the most up-to-date information. Readers should contact their attorney for advice on any particular legal matter.
  • Do you meet the eligibility criteria for Chapter 7 bankruptcy, and what are the associated costs?
  • Are there alternative solutions that might be a better fit for your situation?
  • Additionally, you must familiarize yourself with specific details about Chapter 7 bankruptcy in Delaware. We'll delve into these aspects further to ensure you have all the necessary information to make an informed decision.

If you prefer a more visual approach, you can utilize the Delaware Chapter 7 Calculator below to estimate your eligibility and potential costs.

1) How Chapter 7 Bankruptcy Works in Delaware

How Fast Do You Get Relief in A Chapter 7 Bankruptcy in Delaware

Completing a no-asset Chapter 7 case typically takes about 120 days from start to finish in the state. A "no-asset" bankruptcy means you don't possess high-value assets that surpass Delaware's bankruptcy exemptions. Thus, your bankruptcy case may conclude relatively quickly if you lack substantial assets.

How Much Does It Cost To File Chapter 7 Bankruptcy in Delaware

Nationwide, the cost of filing for Chapter 7 Bankruptcy usually falls between $500 and $3000. However, even within Delaware, costs vary depending on where you file. For instance, in Newark, you might be looking at an attorney fee of $1,170; in Wilmington, it could be $935.

Moreover, you might be able to lower the bankruptcy filing cost if you qualify for a filing fee waiver. Make sure to check out the deets on the Delaware filing fee waiver.

So, How Do I Qualify For Chapter 7 Bankruptcy in Delaware?

To assess your eligibility for Chapter 7, examining the Chapter 7 Bankruptcy Delaware Income Limits is advisable. This test determines if you qualify for a bankruptcy discharge, meaning your debts are forgiven. If you pass the means test (which you can estimate below), Chapter 7 will address most of your unsecured debts. These debts lack collateral, including medical bills, personal loans, certain old income tax debts, utility bills, credit card debts, and most personal judgments.

What about secured debts in Chapter 7?

It could be a viable option if you're considering Chapter 7 bankruptcy to eliminate secured debts like car loans and mortgages. However, the trade-off is that you'll likely need to surrender the asset to the creditor, who will view it as payment in full for the debt.

IMPORTANT: Chapter 7 Qualification via Delaware Means Test

Using the Bankruptcy Means Test, you can assess your eligibility for Chapter 7 bankruptcy in Delaware. This form calculates your average annual income from the past six months and compares it to the median income of households in Delaware. You may qualify for a Chapter 7 bankruptcy discharge if your income falls below the Delaware median.

You can access the calculator below to determine your eligibility.

My Income Exceeded The Chapter 7 Means Test Allowable in Delaware

If your income exceeds the median income in your state, you may need to proceed to part 2 of the means test or explore alternative options. You can refer to this resource for assistance with passing the Chapter 7 means test when your income exceeds the median.

Chapter 7 Bankruptcy Delaware Income Limits

If you're filing for bankruptcy in Delaware on or after November 1, 2023, the income limitations based on household size are as follows:

# of PeopleAnnual Income
1$72,682
2$88,592
3$100,314
4$122,990
5$132,890
6$142,790
7$152,690
8$162,590
9$172,490

For each additional family member beyond six, add $9,000 to the limit.

Will I lose my belongings if I file Chapter 7 bankruptcy? Understand Delaware bankruptcy Exemptions

Navigating bankruptcy can be daunting, but understanding bankruptcy exemptions is critical. These exemptions safeguard your property's equity during bankruptcy proceedings, determining what you retain and what might be sold to repay debts.

Regardless of age or marital status, all Delaware residents are eligible for a $125,000 exemption for home equity. Furthermore, Delaware prohibits the use of federal exemptions.

Always verify the latest information on bankruptcy exemptions to make informed decisions. Laws change, and staying updated is crucial.

Chapter 7 Bankruptcy Delaware Pros and Cons

Pros

  1. Quick discharge: You could become debt-free in around 120 days, offering a fresh start.
  2. Property protection: Meeting exemption thresholds may help retain a significant portion of personal property.
  3. Legal protection: Filing triggers an automatic stay, halting debt collection lawsuits and harassing calls from collectors.
  4. Relief from loan deficiencies: Bankruptcy can lift the burden of owing more on a loan than the collateral's value.

Cons

  1. Income requirements: Meeting specific income thresholds is necessary for eligibility.
  2. Potential property loss: If your assets surpass exemption limits, you may need to relinquish some property.
  3. Credit report impact: Filing for Chapter 7 can negatively affect your credit report for up to ten years, potentially hindering future loan approvals and favorable interest rates.
  4. Non-dischargeable debt: Certain debts, like student loans and child support payments, typically cannot be discharged through Chapter 7 bankruptcy.

2) Alternatives to Chapter 7 Bankruptcy in Delaware

a) Chapter 13 Bankruptcy

If your income surpasses Chapter 7 bankruptcy's limit, Chapter 13 bankruptcy offers an alternative for debt relief in Delaware. It enables you to restructure debts into manageable monthly payments, potentially safeguarding assets like your home and vehicles, halting foreclosure, and preventing repossession. Additionally, unpaid child support, alimony, and car loan payments may be reduced through this process.

Can you afford Chapter 13 bankruptcy?

If you're contemplating Chapter 13 bankruptcy, this calculator can assist in estimating whether you can handle the monthly payments.

b) Debt Settlement/Relief

An alternative to Chapter 7 and Chapter 13 bankruptcy is debt settlement. With this option, a debt settlement company negotiates a reduced amount on your total debt, potentially saving you money over time. However, it's important to weigh its impact on your credit score and conduct thorough research to select a reputable, transparent debt settlement company.

c) Debt Management

Another avenue to explore is debt management. Unlike debt settlement, which focuses on reducing the total debt amount, debt management companies aim to lower your interest rates. These programs typically run for 3 to 5 years and may incur higher costs than debt settlement. It's worth noting that not all creditors may cooperate with debt management companies.

Despite potential drawbacks, debt management could substantially decrease your interest rates by approximately 10-20% if you're grappling with significant high-interest credit card debt. This reduction may lead to substantial long-term savings ranging from 30-50% of your current debt. Assessing your financial situation and carefully considering which option aligns best with your needs is crucial.

d) Debt Payoff Planning

One final option worth considering is debt payoff planning. While it demands effort and disciplined budgeting to allocate extra income towards debt reduction, it offers monthly tangible progress. You can gradually chip away at your debts by selecting a suitable debt payoff strategy. Additionally, as you retire individual debts, you can redirect those payments toward others, accelerating your overall debt repayment process.

3) Specific Delaware Chapter 7 Bankruptcy Information:

Delaware Chapter 7 Bankruptcy Credit Counseling and Debtor Education Courses

During the Chapter 7 bankruptcy filing process, you must complete educational courses to obtain a bankruptcy discharge. These courses aim to enhance your financial understanding and explore alternatives to bankruptcy. Following your case filing, you must undertake a debtor education course, which equips you with the skills and knowledge to manage your finances better moving forward.

Approved by the United States Trustee's office, specific companies in Delaware offer these bankruptcy courses. For a list of approved companies, you can visit the UST website.

Delaware Chapter 7 Bankruptcy Court Locations

It's important to note the 341 meeting(s) of creditors when navigating Chapter 7 bankruptcy proceedings. While many of these meetings have transitioned to virtual formats like phone or Zoom due to the pandemic, being aware of the nearest courthouse is crucial in case an in-person appearance is required. To assist with this, we'll provide a list of court locations based on the bankruptcy districts in Delaware.

District of Delaware

Here are the locations of U.S. Bankruptcy Courts and a Superior Court in various cities throughout the state:

  • 824 Market Street N, 3rd Floor, Wilmington, DE 19801

Chapter 7 Bankruptcy Trustees Delaware

List of Chapter 7 bankruptcy trustees in Delaware:

NamePhone
Don A. Beskrone(302) 654-1888
Jeoffrey L. Burtch(302) 472-7427
David W. Carickhoff, Jr.(302) 777-4350
Alfred T. Giuliano(856) 596-7000
George L. Miller(215) 561-0950

Conclusion

After learning about Chapter 7 bankruptcy in Delaware, you may feel more informed about its requirements and alternative options available. If you're interested in determining your eligibility and estimating costs quickly, use the Chapter 7 bankruptcy means test calculator below.

Check out our article for more juicy details about the Chapter 7 bankruptcy process. Click here to learn more!

Finally, if you're interested in reducing attorney fees and are willing to handle some tasks, we offer guidance on filing bankruptcy without an attorney. You can find the article here: filing bankruptcy without an attorney.

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