Delaware Bankruptcy Exemptions

Laws which protect a debtor’s property when personal bankruptcy is filed in the state of Delaware.

(Title 10)
§ 4914. Exemptions in bankruptcy and insolvency.

(c) In any federal bankruptcy or state insolvency proceeding, an individual debtor and/or such individual’s spouse domiciled in Delaware shall be authorized to exempt from the bankruptcy or insolvency estate, in addition to the exemptions made in subsection (b) hereof and in § 4915 of this title, the following:

(1) Equity in real property or equity in a manufactured home (as defined in Chapter 70 of Title 25) which constitutes a debtors principal residence in an aggregate amount not to exceed $75,000 in 2010, $100,000 in 2011, and $125,000 in 2012, except that the exemption for persons totally disabled from working or married persons where at least one of the spouses is 65 years old or older shall be $125,000 effective immediately, and
(2) A vehicle and/or tools of the trade necessary for purposes of employment in an amount not to exceed $15,000 each.

§ 4902. Exempt property.
a) Every person residing within this State shall have exempt from execution or attachment process, or distress for rent, the following articles of personal property: The family Bible, school books and family library, family pictures, a seat or pew in any church or place of public worship, a lot in any burial ground, all the wearing apparel of the debtor and the debtor’s family.
b) In addition to the articles specifically named in subsection (a) of this section, each person residing in this State shall have exempt the tools, implements and fixtures necessary for carrying on his or her trade or business, not exceeding in value $75 in New Castle and Sussex Counties, and $50 in Kent County.
c) All sewing machines owned and used by seamstresses or private families, shall be exempt from levy and sale on execution or attachment process and also from distress and sale for rent. This provision shall not apply to persons who keep sewing machines for sale or hire.
d) All pianos, piano playing attachments and organs leased or hired by any person residing in this State, shall be exempt from levy and sale on execution or from distress for rent due by such person so leasing or hiring any such piano, piano playing attachment, or organ in addition to other goods and chattels exempt by law. The owner of any such piano, piano playing attachment or organ or such owner’s agent, or the person so leasing or hiring the same shall give notice to the landlord or the landlord’s agent that the instrument is hired or leased.

§ 4903. Head of family exemption.
Every person residing in this State, and being the head of a family, shall have exempt from execution or attachment process, in addition to the exemptions in § 4902 of this title, other personal property not exceeding $500, the articles to be selected by the debtor. The exemptions in this section shall not apply to goods or chattels of a merchantable character bought to be sold and trafficked in by the person in the prosecution of the person’s regular business or occupation. No person shall have exempt from execution or attachment process any personal property, excepting that which is expressly exempted by § 4902 of this title when such exemption would prevent the collection according to law of any debt or claim that may be due or growing due for labor or services (other than professional services) rendered by any clerk, mechanic, laborer, or other employee of any person or persons against whom such execution or attachment process may be issued.

§ 4913. Exemption and attachment of wages.
a) Eighty-five percent of the amount of the wages for labor or service of any person residing within the State shall be exempt from mesne attachment process and execution attachment process under the laws of this State; but such limitation shall be inapplicable to process issued for the collection of a fine or costs or taxes due and owing the State.
b) On any amount of wages due, only 1 attachment may be made. Any creditor causing such attachment to be made shall have the benefit of priority until the judgment with costs for which the attachment was made has been paid in full.
c) Wages shall include salaries, commissions and every other form of remuneration paid to an employee by an employer for labor or services, but shall not include payment made for services rendered by a person who is self-employed.

§ 4916. Exemption of Delaware College Investment Plan Accounts.
a) In addition to the exemptions provided in §§ 4902 and 4903 of this title, there shall be exempt from execution or attachment process assets held in and proceeds payable under Chapter 5 of Title 13 or from any account established under the Delaware College Investment Plan pursuant to subchapter XII of Chapter 34 of Title 14 (a “Plan Account”). This exemption shall only apply to such amount as does not exceed the total contributions permitted under § 529(b)(7) of the Internal Revenue Code with respect to any Plan Account.
b) This section shall not exempt from execution or attachment assets contributed by a debtor to any Plan Account within 365 days to the extent that such assets contributed within said 365 days exceed the greater of (i) $5,000 or (ii) the average annual contribution made by such debtor to such Plan Account for the 2 calendar years preceding the date of the filing of such execution or attachment or the filing of such petition.
c) This section shall not exempt from execution or attachment any judgment obtained under § 554 of Title 30. If any portion of this section is held invalid or is preempted by federal law, in whole or in part, the remaining portions shall remain in effect to the maximum extent permitted by law.
d) In the case of a Plan Account owned by a trust, nothing in this section may be construed to limit the protections afforded to trusts by § 3536 of Title 12.

(Title 11)
§ 8803. Garnishment and assignment of benefits prohibited. (Police officers)

Except for orders of the Delaware Family Court for a sum certain payable on a periodic basis, the benefits provided by this chapter shall not be subject to attachment or execution and shall be payable only to the beneficiary designated and shall not be subject to assignment or transfer.

§ 9011. Payment of compensation. (Crime victims’ compensation)
a) Any person, regardless of age or mental condition, is entitled to make application for compensation under this chapter if the person is a victim as defined herein. In any instance in which the person entitled to make application is deemed by law to be incompetent the person may nevertheless appear in person or the application may be made on the person’s behalf by any person acting as a relative, guardian or attorney. Every victim making application shall be entitled to appear and be heard by the Agency in accordance with § 9012(b), (c), and (d) of this title.
b) Except in cases of dire hardship, as determined by the Agency, there shall be no payment of compensation where the claim is for less than $25. Awards may be paid in a lump sum, or in periodic payments as determined by the Agency. Each and every payment shall be exempt from attachment, garnishment or any other remedy available to creditors for the collection of a debt.
c) The Agency may require any injured person filing a claim pursuant to this chapter to submit to a physical or mental examination by a physician or physicians selected by the Agency.
d) No compensation shall be awarded under the chapter to any individual victim (or in case of the death of the victim, to dependent relatives, or to the victim’s legal representative) in a total amount in excess of $25,000; provided, however, that the Agency may award compensation to victims who are permanently and totally disabled in an amount not to exceed $50,000. The Agency shall deduct any payments received by the victim or by any of the victim’s dependents from the offender or from any person on behalf of the offender, from any insurer, except life insurance proceeds, or from the United States, the State of Delaware or any state, or any of its political subdivisions from its award of compensation if such payments were in any manner made to compensate such person for personal injury or death arising from the same incident.
e) Although a person otherwise incompetent may appear and press a claim before the Agency, payment of compensation shall not be made directly to any person legally incompetent to receive same but shall be made to a third person for the benefit of such incompetent. In the case of any payment for the benefit of a child or incompetent, the Agency shall order the payee to file an accounting with the Agency no later than January 31 of each year for the previous calendar year, and to take such other action as the Agency shall determine to be necessary and appropriate for the benefit of the child or incompetent.

(Title 12)
§ 3536. Rights of creditors and assignees of beneficiary of trust [Effective until Aug. 1, 2010]

a) Except as expressly provided in subsections (c) and (d) of this section, a creditor of a beneficiary of a trust shall have only such rights against or with respect to such beneficiary’s interest in the trust or the property of the trust as shall be expressly granted to such creditor by the terms of the instrument that creates or defines the trust or by the laws of this State. The provisions of this subsection shall be effective regardless of the nature or extent of the beneficiary’s interest, whether or not such interest is subject to an exercise of discretion by the trustee or other fiduciary, and shall be effective regardless of any action taken or that might be taken by the beneficiary. Every interest in a trust or in trust property or the income therefrom that shall not be subject to the rights of creditors of such beneficiary as expressly provided in this section shall be exempt from execution, attachment, distress for rent, foreclosure, and from all other legal or equitable process or remedies instituted by or on behalf of any creditor, including, without limitation, actions at law or in equity against a trustee or beneficiary that seeks a remedy that directly or indirectly affects a beneficiary’s interest such as, by way of illustration and not of limitation, an order, whether such order be at the request of a creditor or on the court’s own motion or other action, that would:

1) Compel the trustee or any other fiduciary or any beneficiary to notify the creditor of a distribution made or to be made from the trust
2) Compel the trustee or beneficiary to make a distribution from the trust whether or not distributions from the trust are subject to the exercise of discretion by a trustee or other fiduciary
3) Prohibit a trustee from making a distribution from the trust to or for the benefit of the beneficiary whether or not distributions from the trust are subject to the exercise of discretion by a trustee or other fiduciary; or
4) Compel the beneficiary to exercise a power of appointment or power of revocation over the trust.

Every direct or indirect assignment, or act having the effect of an assignment, whether voluntary or involuntary, by a beneficiary of a trust of the beneficiary’s interest in the trust or the trust property or the income or other distribution therefrom that is unassignable by the terms of the instrument that creates or defines the trust is void. No beneficiary may waive the application of this subsection (a). For purposes of this subsection (a), the creditors of a beneficiary shall include, but not be limited to, any person that has a claim against the beneficiary, the beneficiary’s estate, or the beneficiary’s property by reason of any forced heirship, legitime, marital elective share, or similar rights. The provisions of this subsection shall apply to the interest of a trust beneficiary until the actual distribution of trust property to the beneficiary. Regardless of whether a beneficiary has any outstanding creditor, a trustee may make direct payment of any expense on behalf of such beneficiary to the extent permitted by the instrument that creates or defines the trust and may exhaust the income and principal of the trust for the benefit of such beneficiary. A trustee shall not be liable to any creditor of a beneficiary for paying the expenses of a beneficiary.
b) Notwithstanding subsection (a) of this section, a beneficiary entitled to receive all or a part of the income of a trust shall have the right to assign gratuitously in writing, at any time or from time to time, a stated fraction or percentage of the beneficiary’s entire remaining income interest in such trust to the State or to any corporation, church, community chest, fund, or foundation authorized as a deduction pursuant to §§ 1107, 1108, and 1109 of Title 30 and such assignment shall be valid and binding on all parties irrespective of any restrictions on assignment contained in the instrument creating or defining the trust; provided, however, that this subsection shall not authorize a beneficiary of such a trust to reduce any part of the beneficiary’s income interest which is subject to such restrictions on assignment below 50% of what such interest would be if no assignments were made under this subsection. Any interest assigned under this subsection, together with a corresponding portion of the corpus of the trust, shall be treated as a separate share and thereafter no provision of the trust permitting invasion of corpus for the benefit of the assignor shall be exercisable with respect to such share.
c) (1) Except as provided in subchapter VI of this Chapter 12 of this title, if the trustor is also a beneficiary of a trust, a provision that restrains the voluntary or involuntary transfer of the trustor’s beneficial interest shall not prevent such trustor’s creditors from satisfying their respective claims from the trustor’s interest in the trust to the extent that such interest is attributable to the trustor’s contributions to the trust. The preceding sentence shall have no application to a trustor if such trustor’s sole retained beneficial interest is a right to receive discretionary distributions to reimburse the trustor’s income tax liability attributable to the trust. Further, a beneficiary of a trust shall not be considered a trustor of a trust merely because of a lapse, waiver, or release of the beneficiary’s right to withdraw a part of the trust property if the value of the property that could have been withdrawn by exercising the right of withdrawal in any calendar year does not exceed at the time of the lapse, waiver, or release the greater of the amount specified in:

a. Section 2041(b)(2) or § 2514(e) of the Internal Revenue Code of 1986 (26 U.S.C. § 2041(b)(2) or § 2514(e)), or any successor provision thereto; or
b. Section 2503(b) of the Internal Revenue Code of 1986 (26 U.S.C. § 2503(b)), or any successor provision thereto.

(2) For the purposes of this section, property contributed to an inter vivos marital trust that is treated as qualified terminable interest property under § 2523(f) of the Internal Revenue Code of 1986 [26 U.S.C. § 2523(f)], as amended, or to an inter vivos marital trust that is treated as a general power of appointment trust for which a marital deduction would be allowed under § 2523(a) and (e) of the Internal Revenue Code of 1986 [26 U.S.C. § 2523(a) and (e)], as amended, over which the settlor’s spouse holds either a general power of appointment exercisable in favor of the settlor’s spouse’s estate or a limited power of appointment, or both, shall not be deemed to have been contributed by the settlor even if the settlor would be a beneficiary of the trust subsequent to the death of the settlor’s spouse.
d) For purposes of subsection (a) of this section, a creditor shall have no right against the interest of a beneficiary of a trust or against the beneficiary or trustee of the trust with respect to such interest unless:

(1) The beneficiary has a power to appoint all or part of the trust property to the beneficiary, the beneficiary’s estate, the beneficiary’s creditors, or the creditors of the beneficiary’s estate by will or other instrument such that the appointment would take effect only upon the beneficiary’s death unless the beneficiary actually exercises such power in favor of the beneficiary, the beneficiary’s creditors, the beneficiary’s estate, or the creditors of the beneficiary’s estate but then only to the extent of such exercise.
(2) The beneficiary has a power to appoint all or part of the trust property to the beneficiary, the beneficiary’s creditors, the beneficiary’s estate, or the creditors of the beneficiary’s estate during the beneficiary’s lifetime unless the beneficiary actually exercises such power in favor of the beneficiary, the beneficiary’s creditors, the beneficiary’s estate, or the creditors of the beneficiary’s estate but then only to the extent of such exercise.
(3) The beneficiary has the power to revoke the trust in whole or in part during the beneficiary’s lifetime and, upon such revocation, the trust or the part thereof so revoked would be possessed by the beneficiary. This paragraph shall have no application to any part of the trust that may not be so revoked by the beneficiary.

e) Notwithstanding subsection (a) of this section, a beneficiary of a charitable-remainder unitrust or charitable-remainder annuity trust as such terms are defined in § 664 of the Internal Revenue Code of 1986 (26 U.S.C. § 664) and any successor provision thereto, shall have the right, at any time and from time to time, by written instrument delivered to trustee, to release such beneficiary’s retained interest in such a trust, in whole or in part, to a charitable organization that has or charitable organizations that have a succeeding beneficial interest in such trust. Notwithstanding subsection (a) of this section, a beneficiary may also disclaim an interest in a trust pursuant to Chapter 6 of this title.(Title 16)
§ 6653. Attachment and assignment of benefits. (Volunteer firefighters)

Except for orders of the Delaware Family Court for a sum certain payable on a periodic basis, the benefits provided by this chapter shall not be subject to attachment or execution and shall be payable only to the beneficiary designated and shall not be subject to assignment or transfer.

(Title 18)
§ 2725. Exemption of proceeds, life insurance.

a) If a policy of insurance, whether heretofore or hereafter issued, is effected by any person on his/her own life, or on another life, in favor of a person other than himself/herself, or, except in cases of transfer with intent to defraud creditors, if a policy of life insurance is assigned or in any way made payable to any such person, the lawful beneficiary or assignee thereof, other than the insured or the person so effecting such insurance or executors or administrators of such insured or the person so effecting such insurance, shall be entitled to its proceeds and avails against the creditors and representatives of the insured and of the person effecting the same, whether or not the right to change the beneficiary is reserved or permitted and whether or not the policy is made payable to the person whose life is insured if the beneficiary or assignee shall predecease such person, and such proceeds and avails shall be exempt from all liability for any debt of the beneficiary existing at the time the policy is made available for his/her use, provided, that subject to the statute of limitations, the amount of any premiums for such insurance paid with intent to defraud creditors, with interest thereon, shall inure to their benefit from the proceeds of the policy. However, the insurer issuing the policy shall be discharged of all liability thereon by payment of its proceeds in accordance with its terms, unless, before such payment, the insurer shall have received written notice at its home office, by or in behalf of a creditor, of a claim to recover for transfer made or premiums paid with intent to defraud creditors, with specification of the amount claimed along with such facts as will assist the insurer to ascertain the particular policy.
b) For the purposes of subsection (a) above, a policy shall also be deemed to be payable to a person other than the insured if and to the extent that a facility-of-payment clause or similar clause in the policy permits the insurer to discharge its obligation after the death of the individual insured by paying the death benefits to a person as permitted by such clause.

§ 2726. Exemption of proceeds, health insurance
Except as may otherwise be expressly provided by the policy or contract, the proceeds or avails of all contracts of health insurance and of provisions providing benefits on account of the insured’s disability which are supplemental to life insurance or annuity contracts heretofore or hereafter effected shall be exempt from all liability for any debt of the insured and from any debt of the beneficiary existing at the time the proceeds are made available for his/her use.

§ 2727. Same–Group insurance
a) A policy of group life insurance or group health insurance or the proceeds thereof payable to the individual insured or to the beneficiary thereunder, shall not be liable, either before or after payment, to be applied by any legal or equitable process to pay any debt or liability of such insured individual or his/her beneficiary or of any other person having a right under the policy.
b) This section shall not apply to group insurance issued pursuant to this title to a creditor covering his/her debtors to the extent that such proceeds are applied to payment of the obligation for the purpose of which the insurance was so issued.

§ 2728. Same-Annuity contracts; assignability of rights.
a) The benefits, rights, privileges and options which under any annuity contract heretofore or hereafter issued are due or prospectively due the annuitant shall not be subject to execution nor shall the annuitant be compelled to exercise any such rights, powers or options nor shall creditors be allowed to interfere with or terminate the contract, except:

(1) As to amounts paid for or as premium on any such annuity with intent to defraud creditors, with interest thereon, and of which the creditor has given the insurer written notice at its home office prior to the making of the payment to the annuitant out of which the creditor seeks to recover. Any such notice shall specify the amount claimed or such facts as will enable the insurer to ascertain such amount and shall set forth such facts as will enable the insurer to ascertain the annuity contract, the annuitant and the payment sought to be avoided on the ground of fraud. (2) The total exemption of benefits presently due and payable to any annuitant periodically or at stated times under all annuity contracts under which he/she is an annuitant shall not at any time exceed $350 per month for the length of time represented by such installments and that such periodic payments in excess of $350 per month shall be subject to garnishee execution to the same extent as are wages and salaries.
(3) If the total benefits presently due and payable to any annuitant under all annuity contracts under which he/she is an annuitant, shall at any time exceed payment at the rate of $350 per month, then the court may order such annuitant to pay to a judgment creditor or apply on the judgment, in installments, such portion of such excess benefits as to the court may appear just and proper, after due regard for the reasonable requirements of the judgment debtor and his/her family, if dependent upon him/her, as well as any payments required to be made by the annuitant to other creditors under prior court orders.

b) If the contract so provides, the benefits, rights, privileges or options accruing under such contract to a beneficiary or assignee shall not be transferable nor subject to commutation, and if the benefits are payable periodically or at stated times, the same exemptions and exceptions contained herein for the annuitant, shall apply with respect to such beneficiary or assignee.§ 2729. Retention of proceeds of policy by company.
Any life insurer shall have power to hold payment of proceeds, as shall have been agreed to in writing by the insurer and the insured or beneficiary. The insurer shall not be required to segregate funds so held but may hold them as a part of its general corporate assets.

The provisions of this section shall not impair or affect any rights of creditors under §§ 2725-2728 of this title.

§ 6218. Benefits not attachable.
No money or other benefit, charity, relief or aid to be paid, provided or rendered by any society shall be liable to attachment, garnishment or other process or to be seized, taken, appropriated or applied by any legal or equitable process or operation of law to pay any debt or liability of a member or beneficiary, or any other person who may have a right thereunder, either before or after payment by the society.

(Title 19)
§ 2355. Assignment of compensation prohibited; exemption from creditors’ claims; child support exception. (Workers’ compensation)

Except for attachments pursuant to child support orders entered under Chapters 4, 5 or 6 of Title 13, claims or payment for compensation due or to become due under this chapter shall not be assignable and all compensation and claims therefor shall be exempt from all claims of creditors.

§ 3374. Assignment, pledge or encumbrance of benefits. (Unemployment compensation)
Any assignment, pledge or encumbrance of any rights to benefits which are or may become due or payable under this chapter shall be void. Such rights to benefits shall be exempt from levy, execution, attachment or any other remedy whatsoever provided for the collection of debt. Benefits received by any individual, so long as they are not mingled with other funds of the recipient, shall be exempt from any remedy whatsoever for the collection of all debts except debts incurred for necessaries furnished to such individual or an individual’s spouse or dependents during the time when such individual was unemployed, and for child support obligations in accordance with § 3313(n) of this title. Any waiver of any exemption provided for in this section shall be void.

(Title 29)
§ 5503. Attachment and assignment of benefits. (State employees)

Except for orders of the Delaware Family Court for a sum certain payable on a periodic basis, the benefits provided by this chapter shall not be subject to attachment or execution and shall be payable only to the beneficiary designated and shall not be subject to assignment or transfer.

(Title 31)
§ 513. Assistance not assignable; exception. (Aid to aged, disabled; general assistance)

Assistance granted under this chapter shall not be transferable or assignable, at law or in equity, and none of the money paid or payable under this chapter shall be subject to execution, levy, attachment, garnishment or other legal process or to the operation of any bankruptcy or insolvency law, with the exception that the State shall seek recoupment for overpayments. Such recoupment may not exceed an amount which will result in the assistance unit’s retaining from its combined aid, income and liquid resources, less than 90% of the amount payable under the State Plan to a family of the same composition with no other income. Recoupment must be made in accordance with applicable federal laws and regulations. The Department shall publish regulations establishing the recoupment rate at any time when there is a change.

§ 2309. Assistance not assignable. (Aid to the blind)
Assistance granted under this chapter shall not be transferable or assignable, at law or in equity, and none of the money paid or payable under this chapter shall be subject to execution, levy, attachment, garnishment or other legal process or to the operation of any bankruptcy or insolvency law.

Note: While this reference information is current as of August 2010, it may not reflect the most up-to-date exemption figures on official state of Delaware bankruptcy court statutes.

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