Bankruptcy exemptions protect the equity in your property from creditors and the bankruptcy court—preventing the equity from being used to pay your creditors. Equity is the value of property after you subtract the amount of any liens against the property from its fair market value.

The equity in your home is one such asset in bankruptcy. And bankruptcy exemptions—including the homestead exemption—allow you to protect the property you will need to maintain a home and employment after bankruptcy.

Bankruptcy exemption amounts vary by state, so the amount you will be able to protect will depend on where you live and the type of bankruptcy you file (Chapter 7 or Chapter 13).

In Delaware, bankruptcy exemptions play a crucial role in both Chapter 7 and Chapter 13 bankruptcy filings. These exemptions allow individuals to keep certain property from being liquidated or used to pay creditors. Delaware does not have a specific homestead exemption to protect equity in a home; instead, it offers a wildcard exemption that can be applied to any property, including a home. As of the knowledge cutoff in 2023, the wildcard exemption amount in Delaware is $25,000. This means that if the equity in your home or any other property does not exceed $25,000, you may be able to protect it from being sold to satisfy debts. It's important to note that exemption amounts can change, and there are other exemptions available for personal property, retirement accounts, and more. An attorney can provide guidance on how to best use Delaware's exemptions to protect your assets in bankruptcy.