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Bankruptcy in Delaware

Who Can File Bankruptcy in Delaware?

Any resident of Delaware which has not filed bankruptcy in the last six years is eligible to petition the court for bankruptcy relief.  As part of this petition you must be willing to honestly disclose all of your assets and debts to the court.  A failure to honestly disclose all of your financial information could potentially bar you from filing for bankruptcy both now and in the future.

What Do I Need To Know Before Filing For Bankruptcy in Delaware?

A lot has changed in the Delaware bankruptcy system in the last few years.  Many of these changes are a result of the bankruptcy abuse prevention and consumer protection act which was passed by the federal government in 2005.  This reform act was passed in order to help curb the abuse of the bankruptcy system by high income debtors who utilized this system as an easy means of discharging debts.  As a result of this new law, all persons who wish to file for bankruptcy must undergo a means test.  A means test consists of comparing the petitioners income to the average income in the area which they live.  If they are determined to have an income which is higher than the average income in their area they will not be allowed to file for Chapter 7 bankruptcy.

What Type of Debts Can Be Discharged As Part of a Bankruptcy Proceeding in Delaware?

Secured Debts:  Secured debts can not be discharged as part of a bankruptcy proceeding.  These debts include items such as a mortgage or car loan.  In order to determine whether or not a debt is secured, simply determine whether or not the debt is directly attached to a specific piece of collateral.  For instance, if you do not pay your mortgage, the financing institution has the right to seize your house since it is used as collateral.  Any debts which meet this test are considered secured debts and can not be discharged.

Unsecured Debts:  Unsecured debts can be discharged as part of a bankruptcy proceeding.  These debts include items such as credit card debt or medical bills.  In order to determine whether or not a debt is an unsecured debt, simply apply the same test you used to determine a secured debt.  If the debt does not meet the standards of a secured debt, it is an unsecured debt and may be discharged as part of your bankruptcy.

Will I lose my house and car if I file for bankruptcy in Delaware?

The law recognizes the importance of maintaining a home and a vehicle in order to survive.  For this reason, the law provides exemptions for your home and car during a bankruptcy proceeding.  As long as your property does not exceed the legal limits set forth as part of this exemption, you will not lose your home or vehicle as part of your bankruptcy proceeding.  If your home or vehicle does exceed these limits or is still being financed by an outside creditor, the rules pertaining to exemption may not apply.

Do I really need to hire an Delaware bankruptcy attorney to represent me?

You are not legally required to hire a Delaware bankruptcy attorney to represent you during your bankruptcy proceeding however, hiring a bankruptcy attorney will greatly increase the chances of a successful outcome in your case.

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