Which chapter of bankruptcy should I file in Delaware?

When filing bankruptcy in Delaware, the first choice you will have to make is what chapter of bankruptcy is appropriate to you. There are several different chapters of bankruptcy that you could potentially file as a private individual. These include:

• Chapter 7

Under a chapter bankruptcy, those assets that are not exempt (i.e. assets other than some of your home equity, your retirement accounts and certain other listed items) are turned over to the bankruptcy court to be sold. The proceeds from the sale of your possessions go to your creditors. The remaining balance of your debt after the proceeds from the sale have been distributed is then forgiven (with the exception of certain debts, like student loan debt).  You must qualify for a chapter 7 by showing you make below the state median or by passing a means test that looks at your income and obligations. 

• Chapter 13

Under a chapter 13 bankruptcy, you may keep all of your possessions. You must create a repayment plan which both the courts and the creditors approve and which allows you to pay off debts over 3-5 years

To determine what chapter is best for you, it is a good idea to speak to a bankruptcy lawyer for help.