Delaware Bankruptcy

The state of Delaware has one bankruptcy district court: Delaware Bankruptcy Court. This court serves the entire state of Delaware . Bankruptcy in the state of Delaware grants debtors with a fresh start because bankruptcy protects consumers against lawsuit from creditors. This protection is extended after you've undergone the mandatory credit counseling and filed your case with the Court. Until that time collectors can still collect on your credit card debts and other debts you owe, including your mortgage.

Chapter 7 is known as "straight" bankruptcy or "liquidation." It requires a debtor to give up property, which exceeds certain limits called "exemptions", so the property can be sold to pay creditors. Chapter 13, also called "debt adjustment", requires a debtor to file a plan to pay debts (or parts of debts) from current income. Either of these chapters may be filed individually or by a married couple filing jointly. Chap 11 BK, which is known as "reorganization", is used by businesses and a few individual debtors whose debts are very large.

Are you facing foreclosure?
Most people in Delaware file under chapter 7, but as a result of the foreclosure crisis, more people are learning about the benefits of chapter 13. If you are facing foreclosure, chapter 7 bankruptcy only provides a temporary automatic stay, so bankruptcy protection under chapter 7 is very limited. But, filing under chapter 13 will stop a foreclosure. And, if you have more than one mortgage, you may be able to get the subsequent ones removed. This only works if you owe more on the first mortgage than what the house is worth. If your house is worth more than what you owe on the first mortgage, the second mortgage will have a value onto which it can hold. But, if not, the 2nd becomes unsecured, and you could file a motion to have it removed after you finish your chapter 13 plan.

Avoiding Bankruptcy
Delaware chapter 7 bankruptcy laws and Delaware chapter 13 bankruptcy laws have gotten more complicated, and bankruptcy is now more expensive than it was. Before filing for bankruptcy, you may want to consider debt settlement. Many creditors would rather settle for less than what you owe than lose everything in the bankruptcy court. If you're facing foreclosure and filing for bankruptcy, your lender may be willing to negotiate a loan modification. This could save you quite a bit of money and allow you to keep your home. Dover bankruptcy lawyers, southern Delaware and other Delaware bankruptcy lawyers can discuss your options with you and help you decide on the best one for your situation.