Delaware does not provide a state homestead exemption for bankruptcy purposes. What is the primary consequence of this for Delaware homeowners facing creditor claims in bankruptcy?
Correct Answer
B) Home equity has no state-law protection from creditors in bankruptcy, though Delaware residents may elect to use federal bankruptcy exemptions instead
Delaware does not provide a general state homestead exemption protecting home equity in bankruptcy proceedings. As a result, a debtor's home equity may be reachable by creditors. However, Delaware allows residents to choose between state exemptions and the federal bankruptcy exemptions under 11 U.S.C. §522(d); electing the federal scheme can provide some home equity protection. Note that Delaware does offer separate property-tax relief programs for qualifying seniors and disabled residents, but these are not bankruptcy homestead exemptions.
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Related Topics & Key Terms
Related Topics:
Key Terms:
Related Concepts
Fee simple absolute is the highest and most complete form of property ownership, giving the owner unrestricted rights to use, possess, enjoy, and dispose of the property. It is of unlimited duration and fully inheritable.
Community property is a system where property acquired during a marriage is owned equally by both spouses.
A freehold estate represents ownership of real property with an indefinite duration.
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