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Delaware Debt Relief: Your Guide to State Laws and Managing Debt

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Compared to the rest of the nation, people in Delaware carry a substantial amount of consumer debt. As you can see in the table below, the state ranks in the top 20 for five major sources of debt, including mortgage, credit and student debt.

But if you are carrying debt in Delaware, not all is lost — we’ll dive into a variety of resources and strategies you can use to dig yourself out of debt.

Keep reading to get a handle on your debt once and for all.

Debt in Delaware: At a glance

Delaware debt
Type Per capita balance, 2018 Rank out of 50 states* U.S. per capita balance
Credit card debt $3,340 16 $3,220
Student loan debt $6,040 10 $5,390
Auto debt $4,850 20 $4,700
Mortgage debt** $37,250 15 $33,680
*No. 1 is highest
**First-lien debt only
Source: Federal Reserve Bank of New York, March 2019

Debt collection in Delaware

As of 2019, Delaware has no state-specific regulations regarding debt collection. However, fortunately for those in debt, the state does adhere to the federal Fair Debt Collection Practices Act (FDCPA), which is a piece of legislation that protects the consumer from unfair debt collection methods used by third-party collectors.

Some of your rights and protections under the FDCPA include:

  • Collectors may only contact you between the hours of 8 a.m. and 9 p.m.
  • Debt collectors can contact people you know to gather your contact information, but they cannot say that you owe a debt or that they work for a debt collection agency.
  • If you have a lawyer, debt collectors must contact them about your debt.
  • You can dispute a debt you believe you do not owe or ask for verification of the debt.
  • Debt collectors cannot harass you, make false claims, threaten you or use obscene language.

Additionally, another federal law, The Consumer Credit Protection Act, limits how much of your wages can be garnished at one time in order to pay off debt. In most cases, the limit is 25% of the employee’s disposable earnings, or the amount by which an employee’s disposable earnings are greater than 30 times the federal minimum wage. However, in cases where bankruptcy, child support, or alimony are involved, that percentage may be greater.

It’s also important to note that those protections don’t do anything to help you resolve your debt. To do that, you should educate yourself on Delaware’s debt regulations, as well as your options for consolidation and reconsolidation. We’ve laid them out below.

Responding to collection letters

If you’ve received a debt collection letter in the mail, don’t fret. Resolving the situation is often easier than you might think. In fact, you can often do so in just a few steps:

Know your protections under FDCPA

Thanks to the FDCPA, creditors are not allowed to harass you. For example, they cannot call repeatedly or use obscene language. They are not allowed to lie to you, either by misrepresenting who they are or the amount that you owe. Additionally, they cannot use intimidating practices such as threatening you with arrest or repossession.

If a creditor has violated any of these practices, you should report them to one or more of the following places: your state attorney general’s office, the Federal Trade Commission (FTC), or the Consumer Financial Protection Bureau (CFPB).

Gather the necessary information on your debt

Once you’re aware of your rights, the next step is to speak to a creditor and gather all the necessary information on the debt that they’re claiming you owe. Request a debt verification letter first and foremost. After you have that in hand, you can begin to take steps toward resolving the situation. When you speak to the creditor, you’ll want to take down the following information:

  • The name of the person who you’re talking to
  • The name of the debt collection company they’re calling from, as well as the company’s address and phone number
  • The name of the original creditor and the amount they’re saying you owe
  • Instructions for how to either dispute the debt or make sure that it’s yours

Always respond in writing

No matter whether you want to dispute the debt or take steps toward paying it off, when you contact your creditors, you’ll want to do so in writing. Be sure to also make a copy of whatever you send so that you have a record that it occurred.

Take action promptly

If the debt isn’t yours: Write the debt collection company to tell them that the debt isn’t yours and that you no longer wish to be contacted about it. File a dispute with the credit bureaus.

If you’re unsure: Write the company to ask them to provide you with more information.

If the debt is yours: Negotiate with the debt collector until you mutually come up with a repayment plan that you can afford.

Understanding your state’s statute of limitations

It’s critical to understand the statute of limitations in Delaware — how long a creditor has to sue you for unpaid debts. However, even if a debt has passed its statute of limitations — making it “time-barred” — collectors can still contact you to try to collect the debt.

It’s important not to make any payments on time-barred debts. If you make even a one-dollar payment, you’ll restart the clock on the statute of limitations and the collector can once again pursue the debt in court.

Compared with other states’ debt collection policies, Delaware has a relatively short statute of limitations, or maximum amount of time during which legal action can be taken against you.

Take a look at the chart below for more details:

Delaware Statute of Limitations on Debt
Mortgage debt 6 years
Medical debt 6 years
Credit card 3 years
Auto loan debt 4 years
State tax debt 20 years

Delaware debt relief programs

When it comes to dealing with debt, it’s important to know that you’re not in this alone. Delaware has many community-based programs available to help you get a handle on your financial situation. As with anything, you’ll want to do your own research on any program you use before giving out the details of your financials. However, here are a few suggestions to get you started:

Delaware Community Reinvestment Action Council (DCRAC)

The Delaware Community Reinvestment Action Council is an organization aimed at ensuring “equitable treatment and equal access to credit and capital through education, outreach, advocacy, and legislation.​”

DCRAC offers counseling and financial literacy classes on subjects such as credit building, taxes and housing. It also offers legal services and its own credit union.

$tand By Me

$tand By Me is a statewide program that offers free one-on-one support to Delaware residents who want to understand more about their money and make good financial decisions. In addition to personal financial coaching, $tand By Me offers a variety of specialized programming aimed to help those with specific goals, such as homeownership or saving for educational costs.

Delaware DOJ Fraud and Consumer Protection Division

The Consumer Protection Unit (CPU) is a part of the Fraud and Consumer Protection Division of the state Department of Justice and the attorney general’s office. The CPU is responsible for protecting the public from frauds and scams. It offers a variety of resources on topics such as mortgage mediation, foreclosure prevention and telemarketing awareness. It also offers a free hotline and online complaint form where citizens can report potential scams.

Payday lending laws in Delaware

  • Maximum loan amount: $1,000
  • Maximum loan term: Less than 60 days
  • Finance charges: No regulation, as long as the terms are spelled out in the agreement beforehand.

Payday loans are one option for paying off small amounts of debt. They are generally considered to be short-term, high-cost loans of $500 or less that are repaid on your next payday. To repay the loan, you typically write a postdated check for the full amount, which is then cashed by the lender on the date specified.

The majority of states have laws governing the sale of payday loans and Delaware is more lenient than most as it has a higher maximum loan amount and fewer regulations regarding the finance charges. However, while these quick loans may seem like an easy solution, many financial professionals do not recommend them.

Payday loans often come with high fees that lead to you paying much more money than you borrowed in the first place. Additionally, payday lenders generally do not consider your ability to repay the loan in the same way that another loan offer might. If you’re considering this type of loan, be sure to read the fine print so that you’re aware of what you’re agreeing to before you sign on the dotted line.

Tips for tackling debt in Delaware

If you’re in debt and would like to get a handle on your finances, don’t worry. There are plenty of solutions available to you for managing your debt. We’ve laid out a few of them for you below. Take a look at these options to see which one might work best for you.

Consolidate your debt

Consolidating your debt is essentially the process of streamlining multiple sources of debt into one to simplify the repayment process. Instead of dealing with multiple due dates and interest rates, you take out one larger loan and use it to pay off your various sources of debt — usually medical debt, credit card balances or personal loans. From that point on, all you have to worry about is making a single, and, hopefully, low-interest payment.

The most popular way to consolidate debt is with a personal loan, which you can obtain from a credit union, bank or online lender. It’s best to get quotes from various lenders to be sure you’re getting the best deal first.

Experts say that consolidating your debt is a solid option if you understand the root cause of your debt and are able to put a stop to it. One example is if you fell into debt while you were out of work and have since gotten another job. It may not be the best option, however, if you’re currently accruing more debt, as this will just add a different payment to the mix.


Refinancing is similar to debt consolidation, except this action is usually reserved for auto loans and mortgages. Here, again, you take out a new loan in order to pay off your old one. Usually, people refinance in order to get a better interest rate, a more favorable loan term, or a lower monthly payment. However, keep in mind that refinancing isn’t free, and that, in exchange for the benefit, you’ll have to pay closing costs on a new home loan and title transfer and re-registration fees on a new auto loan. Where student loans are concerned, you shouldn’t have to pay a fee. Just make sure the lender you’re working with doesn’t charge an origination fee and you’re good to go.

Use a balance transfer card

If your debt is mainly credit card debt, you may want to consider using a balance transfer card.  These cards allow you to transfer all of your existing balances onto a single new card, usually one that has a low (often 0%) introductory interest rate offer. Again, the goal is to consolidate your debt into one monthly payment.

This method works best if you have a good credit score, qualify for the balance transfer offer and are confident that you will be able to pay off your debt before the low introductory rate ends. If you have a lower credit score, you may not be eligible for those offers, and if you can’t pay off your debt in time, returning to high credit card interest rates may not make this move feasible.

Negotiate directly with the lender

If your debt is badly past due, lenders may be more willing to negotiate with you. At the end of the day, they’d rather walk away with something rather than nothing.

You can work out a different payment plan or ask the lender to settle the debt for less than you owe. Just be aware that you may owe taxes on the forgiven debt if it’s greater than $600.

Filing for bankruptcy in Delaware

As at last resort, you can also file for bankruptcy to get rid of your debts. There are two bankruptcy options for individuals: Chapter 13 and Chapter 7. Each works in the following manner:

Chapter 13: Sometimes called the “wage earner’s bankruptcy,” this type of filing allows you to work out a payment plan in order to repay your debts over a period of three to five years. Notably, you’re allowed to keep your assets, such as your home. It will also remain on your credit report for seven years.

Chapter 7: If you have no way to repay your debts, you may want to consider filing for Chapter 7 bankruptcy. With this option, your assets will be liquidated to repay your creditors, though there are some exemptions, and in the end, most forms of debt will be forgiven. Chapter 7 bankruptcies are often more damaging to your credit report than Chapter 13, though, as they stay on your report for up to 10 years.

Also of note, Delaware has some bankruptcy exemptions that are better than in some states. Under Chapter 7, you can keep your home, as long as you have $125,000 or less in equity.

If you’re considering bankruptcy in Delaware, you may want to consider some of these resources:

The bottom line

Consumer debt affects many Delawareans, so if you’re one of them, you’re not alone. However, with a little research, it is possible to get out of debt. Use these resources as a guide to determine which debt relief solutions might be right for you.

The information in this article is accurate as of the date of publishing.


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