Delaware Homestead Laws

A common fear for homeowners filing bankruptcy is having their house sold to pay off creditors. While the possibility exists, Delaware provides protections that can keep filers from losing their primary residence. This is known as a homestead exemption, a bankruptcy exemption that can help property owners keep their real estate and personal property in the event of bankruptcy.

This article explains how the homestead exemption works in Delaware, including the exemption amount and how to apply for it. If you’re thinking about filing bankruptcy and aren’t sure if you’ll be able to keep your house, contact a Delaware bankruptcy lawyer for legal advice.

What Is the Homestead Exemption and How Can it Help You?

When you file bankruptcy, your assets are at risk of being sold off. If the trustee believes they can pay some or most of your debts by selling your house, they may attempt to force you to sell it.

If you don’t have any equity in your home, there’s no point in selling it. Any money the trustee would get from a forced sale of your principal residence would go to the mortgage lender, with nothing left to pay your other creditors.

For those with significant equity in their home, the trustee may decide to sell it. Any money left after your debts are paid goes to you. That’s not an ideal outcome. The whole point of filing bankruptcy is to get a fresh start, not to lose your house and other property.

Delaware offers bankruptcy filers protection from losing their house, motor vehicle, and other assets. This protection comes in the form of the homestead exemption, which protects the equity you have in your home up to $200,000. If you have $250,000 equity in your primary residence, the exemption protects up to $200,000. When you subtract the exemption amount from your total equity, there’s $50,000 available for creditors.

Theoretically, the trustee may still decide to sell your home and use the $50,000 to pay off creditors. However, your bankruptcy attorney may be able to convince the trustee to let you keep your house and negotiate a settlement with your creditors instead.

Delaware Homestead Exemption: The Basics

Delaware is one of the states that offers debtors protection from losing their home in bankruptcy. The Delaware homestead exemption protects your equity, up to $200,000. The sale of a home is often part of a Chapter 7 bankruptcy case, so the exemption can help prevent the trustee from selling your house to pay creditors.

You must claim the homestead exemption when you file your bankruptcy petition and submit certain documentation to support your exemption application. Under Delaware law, this includes:

• Proof of ownership: You must submit evidence that you own your primary residence. You can do this by supplying the trustee with a copy of your deed or homeowner’s insurance policy.
• Proof of payment: You must demonstrate that you are making payments on your home. Either you or your attorney must provide the trustee with a copy of your most recent mortgage statement.
• Recent photos and a property description: Take pictures of your house and surrounding property and attach them to your bankruptcy petition. You can also go to your local tax assessor’s office and ask for a copy of the formal description of your property.
• Recent appraisal: The trustee will require proof of your home’s assessed value. The easiest way to do this is to provide a copy of an appraisal showing the fair market value of your home.
• Notarized statement by mortgage lender: You must attach a notarized letter from your mortgage lender confirming your loan. It must include your current loan balance and the status of any liens.

Attach all of the above documentation with your bankruptcy petition and schedules. Once the trustee has a chance to review all of this, they’ll let you know about your eligibility for the state homestead exemption.

Eligibility for Delaware Homestead Exemption

You must meet certain eligibility requirements to take advantage of Delaware’s homestead exemption. The Delaware Code outlines these requirements. Failure to meet the criteria means you can’t claim the state homestead exemption.

Delaware is an “opt-out” state, which means you can’t claim the federal bankruptcy exemptions. Your only recourse is to claim the exemptions available under state law.

The basic eligibility requirements for Delaware’s homestead exemptions are as follows:

• You and your spouse (if relevant) must be residents of the State of Delaware. Under federal bankruptcy rules, you must reside in the state for two years before your bankruptcy petition to use the state-specific exemptions.
• The property must be your principal residence. You can’t apply the Delaware homestead exemption to vacation homes, rental property, or other non-residential real estate.
• You can apply the exemption to a single-family home, condominium, mobile home, manufactured home, or other types of dwelling. As long as it is your primary residence, it qualifies for the homestead exemption.

If you’re uncertain about your eligibility or have already been denied, it’s a good time to speak with a Delaware bankruptcy attorney.

How Much Is the Homestead Exemption in Delaware?

Delaware‘s homestead law calls for an automatic exemption that protects up to $200,000 of equity in your home. This amount is current as of 2026. The amount is fixed, regardless of whether you are over 65 years of age or disabled.

While the exemption amount in Delaware doesn’t increase for people over a certain age, it’s somewhat generous when compared to some other states. Delaware’s exemption carries no minimum or maximum acreage limits, nor does it matter whether your home is located in an urban or rural setting.

How the Homestead Exemption Works in Delaware

To know whether the homestead exemption can save your home from a forced sale, you’ll need an accurate valuation of the property. Whether you live in New Castle County, Kent County, or Sussex County, an experienced professional can provide it. Once you have an appraisal, it’s time to see if the $200,000 homestead exemption will help you hold on to your principal residence.

Imagine that the appraisal on your home comes in at $300,000, and you still owe $100,000 on your mortgage. This means that you have $200,000 equity in your real property, the same amount as the exemption. In this case, your home should be safe from a trustee sale.

If we increase the value of your home to $400,000 and keep the outstanding mortgage at $100,000, your equity would be $300,000. The $200,000 exemption wouldn’t cover your total equity in the house. The trustee could order a sale of the house and use the difference to pay creditors.

Married couples do not get a higher homestead exemption amount in Delaware. Even if you and your spouse both file bankruptcy, you only get to claim the $200,000 exemption available to single filers.

Disclaimer: State laws change frequently due to new legislation, higher court rulings, and other means. While FindLaw strives to provide the most current information, consult a local bankruptcy lawyer to confirm the homestead exemption amounts in your state.

Get Legal Help in Delaware

Delaware’s homestead exemption can help protect your house during bankruptcy proceedings. To ensure your filing covers everything it possibly can, consider contacting a Delaware bankruptcy attorney. An attorney will examine your situation, explain your options, and help you gain every advantage possible. You can also explore how other bankruptcy exemptions may apply in your case.