2024 Guide to Debt Consolidation and Relief in Delaware

Delaware charges no local or state sales taxes, but residents of the small state have still racked up a fairly significant amount of debt. The state’s average per capita debt balance is $61,490.

If you’re a Delaware resident who is struggling to repay debt, here’s everything you need to know to become debt-free.

How to Become Debt-Free in Delaware

Here is a look at each program to help you determine what works best if you’re seeking debt relief in Delaware:

1. Debt Consolidation Loan

Works best for: People with 670+ credit scores

Debt consolidation loans involve using a new, larger loan to pay off your other unsecured debts, including credit cards. A debt consolidation loan should typically have a lower interest rate than your current debts to be effective.

This leaves you with one monthly payment and one creditor, saving money and simplifying your payments.

2. Debt Consolidation Company / Debt Consolidation Program

Works best for: Anyone with more than $10,000 in unsecured debt who is struggling to make their payments and wants to avoid bankruptcy.

Debt settlement involves negotiating with creditors to repay less than the total amount they owe, sometimes as a lump sum and sometimes as a longer-term payment plan.

In Delaware, debt settlement can help you pay off different forms of consumer debts, including:

Credit cards/lines of credit
Personal loans
Department store cards
Old judgments
Student loans in default
Other unsecured loans or debts

To make debt settlement work, you must stop paying your debts for three to six months until your creditor charges off the debt. This will damage your credit score but will incentivize the creditors to negotiate. Once settlements are reached, and payments are made, your credit score will rebound.

The average debt settlement customer ends up debt-free while paying about 75% to 80% of the total enrolled in the program after all fees are paid.

Debt settlement risks

Your creditors aren’t obligated to settle
If a creditor refuses to settle, you could end up having to pay accrued interest and late fees
Missed payments will show up on your credit report
You may have to report the forgiven amount as income tax to the IRS

Delaware Debt Consolidation Companies

Are you looking for a debt consolidation agency in Delaware to help you get a handle on debts? Here are a few firms that could help:

Best Overall: DebtHammer

DebtHammer helps borrowers overwhelmed by unsecured debts ranging from payday loans and tribal loans to credit cards and medical bills.

After a free consultation to review your situation, the DebtHammer representative will offer you a menu of options. You will decide on the course of action you prefer. These options may include debt settlement, debt consolidation, bankruptcy or others. DebtHammer requires a minimum debt of $7,500 for program enrollment or $1,000 in payday loans. The company charges 25% of the total enrolled debt.

READ MORE: DebtHammer review

Though based in Texas, DebtHammer currently provides solutions to residents of Delaware, Alaska, Alabama, Alaska, Arizona, Arkansas, California, Florida, Georgia, Illinois, Kansas, Louisiana, Maine, Massachusetts, Michigan, Montana, Nebraska, New Jersey, New York, North Carolina, North Dakota, Ohio, Oklahoma, Rhode Island, South Carolina, Tennessee, Texas, Virginia, West Virginia and Wyoming. Some service options may not be available in all states.

Click here to schedule a free consultation.

More Debt Relief Companies

Debt Negotiation Services Debt Settlement Company: Boynton Beach, CA (561) 964-6404 thednsway.com
Alleviate Financial Solutions 4 Park Plaza Suite 1500, Irvine, CA; (800) 308-2935 alleviatefinancial.com
Guardian Litigation Group: 17922 Fitch Suite 150, Irvine, CA; (949) 312-4226 guardianlit.com
New Era Debt Solutions: 330 Wood Rd., Suite B Camarillo, CA; (805) 303-8773 neweradebtsolutions.com
Global DS 675 W Indiantown Rd. Jupiter, FL; (866) 677-5044 globaldsgroup.com
InCharge Debt Solutions: Orlando, FL; (800) 565-8953 incharge.org
Golden Financial Services Debt Settlement Corporation: Lake Worth, FL, (619) 600-5189 goldenfs.org
National Debt Relief 180 Maiden Ln 30th floor, New York, NY; (800) 300-9550 nationaldebtrelief.com
DebtBlue: 1125 E Campbell Rd Suite 200, Richardson, TX; (855) 269-9462 try.debtblue.com

Delaware Debt Settlement Attorneys

Cynthia L. Carroll: 262 Chapman Road Bellevue Building, 262 Chapman Rd #108, Newark, DE; (302) 248-4306; www.cynthiacarrolllaw.com
Morris James LLP: 500 Delaware Ave # 1500, Wilmington, DE; (302) 888-6800; www.morrisjames.com
Tiffany Poole Esq: 2710 Centerville Rd Ste 101, Wilmington, DE; (302) 428-0100; www.pmcelaw.com
Delaware Bankruptcy Attorney: 1213 N King St Suite 2, Wilmington, DE; (302) 214-0777; delawarebankruptcyattorney.com
Law Office of Steven J. Stirparo: 3622 Silverside Rd, Wilmington, DE; (302) 479-9555; www.stirparolaw.com
The Law Office of William F. Jaworski: 1274 S Governors Ave, Dover, DE; (302) 730-8511
The Smith Firm LLC: 8866 Riverside Dr, Seaford, DE; (302) 875-5595; www.thesmithfirm.org
Poole, Mensinger, Cutrona & Ellsworth-Aults: 2710 Centerville Rd Ste 101, Wilmington, DE; (302) 428-0100; www.pmcelaw.com
Huang Law LLC: 3513 Concord Pike #3100, Wilmington, DE; (302) 478-2900; www.xhlegal.com
Whitehead Law: 5 W Market St, Georgetown, DE; (302) 663-7975: whiteheadlawde.com
Holfeld & Becker: 107 S Main St, Camden, DE; (302) 674-5757; www.holfeldbecker.com

When seeking debt relief in Delaware, it’s important to note that not all types of debt are eligible. Debts that can be included in the state’s debt settlement programs include:

Credit cards
Department store cards
Signature loans
Personal lines of credit
Old repossessions
Other unsecured debts
Old judgments
Private student loans in default

Debts that don’t typically qualify for debt settlement in Delaware include:

Home mortgages
Federal student loans
Car loans
Other secured debts
Credit Union debts
Medical bills

3. Debt Management

Works best for: People with primarily credit card debt. Many credit counseling agencies work exclusively with credit card debt (and thus won’t be a help if you need to consolidate medical bills or student loans.)

A debt management program will usually reduce the interest rates on your credit cards from the current average of about 20% to somewhere around 9%. This will lower your monthly payment. However, unlike debt settlement, you will repay the full amount you owe, plus a lower amount of interest. The program usually takes 3-5 years to complete.

Pro tip: It’s important to note that only 55% to 70% of customers who enroll in DMPs successfully complete the program. If you enroll in a Debt Management Plan but don’t complete it, your financial situation could worsen.

So, for example, if you had $5,000 in credit card debt and were paying 25% interest, your monthly interest rate would be $105. If you reduce the interest to 8%, you’ll pay $33 a month in interest. That’s a $72 savings that you could apply to reducing your debt and paying it off faster.

These programs are usually set up and administered by nonprofit credit counseling agencies.

Like with debt settlement, debt management does not involve a loan. Credit scores won’t matter. But if you default on payments, your creditor could raise the interest rate back to its original amount.

Credit Counseling Agencies in Delaware

Debt Hero Wilmington Credit Consolidation: 1000 N West St, Wilmington, DE; (302) 342-1549
FairDebtRelief.com: 124 Broadkill Rd, Milton, DE; (833) 889-3328
Higher Level LLC: 8 The Green Suite #8569, Dover, DE; (888) 657-2670; www.higherlevelcompany.com
Qwest Credit Enhancement: 918 N Clayton St, Wilmington, DE; (302) 225-7700; www.qwestcredit.com
Pyramid Credit Repair – Wilmington: (855) 984-1867; pyramidcreditrepair.com

4. Bankruptcy

Works best for: People who can see no other way to get out of debt within the next five years, who’ve already suffered significant credit score damage or who’ve tried one or more of the other options and failed.

For some Delaware residents seeking debt relief, bankruptcy could offer a fresh start. The two main types of personal bankruptcy are:

Chapter 7: Usually the most common option for individuals, Chapter 7 involves selling off (liquidating) the debtor’s assets to repay their creditors. Afterward, any remaining eligible debts are erased. Chapter 7 cases usually last 4 to 6 months.
Chapter 13: With Chapter 13, the debtor gets to keep most or all of their property and assets. Instead, they must set up a 3 or 5-year payment plan with their creditors to pay as much of their debts as possible. These cases are usually much more complicated and often require a bankruptcy attorney.

Most people don’t get to choose which type of bankruptcy they file. For instance, to qualify for Chapter 7, you must first pass a means test.

This test considers the individual’s income, expenses, and household size when determining if they have enough disposable income to repay their debts.

In Delaware, those limits are:

1 Member Household – $51,711.00
2 Member Household – $62,350.00
3 Member Household – $68,439.00
4 Member Household – $85,806.00
5 Member Household – $93,906.00
6 Member Household – $102,006.00
7 Member Household – $110,106.00
8 Member Household – $118,206.00
9 Member Household – $126,306.00
10 Member Household – $134,406.00

READ MORE: Types of bankruptcy explained

Pro tip: If you are experiencing a hardship and cannot pay your tax liability in full, Delaware’s Division of Revenue is willing work with you to resolve your tax liability, which may eliminate the need for you to consider bankruptcy as an alternative. Contact the Division of Revenue at (302) 577-8586 to discuss payment options.

A bankruptcy filing will temporarily stop Division of Revenue enforcement action to collect taxes incurred before the petition was filed. However, you are still required to file returns and pay taxes that become due after your petition is filed.

Delaware Bankruptcy Exemptions

Delaware residents are required to use Delaware’s state exemptions. Here are some of the most common exemptions:

Homestead: $125,000
Personal property: $15,000 (this includes trade tools and clothing) plus another $500 in personal property if you’re the head of a household. Family pictures and books are also exempt.
Vehicle: $15,000, but only if the vehicle is necessary for work
Wages: 85% earned but unpaid
Pension/retirement: Retirement accounts and many types of pensions are exempt

Statutes of Limitations on Debt in Delaware

The statute of limitations determines whether a creditor can legally sue a debtor (borrower) over an unpaid debt. After the statute of limitations ends, the creditor can no longer initiate a lawsuit on the outstanding debt. However, they can still try to collect the debt.

In Delaware, the statute of limitations depends on the type of debt:

Credit card debt: 3 years
Medical bills: 3 years
Auto loans: 3 years
Student loans: 3 years
Mortgages: 3 years
Judgments: 5 years

To learn more, contact the Delaware state attorney general’s office.

Debt Collection Laws in Delaware

In addition to the FDCPA, Delaware also offers certain state protections to residents.

Interest rate caps
Bad check laws
Garnishment exemptions: 85% of disposable earnings
Collection agencies must be bonded and licensed

Under the FDCPA, the following debt collection practices are prohibited in Delaware:

Sending written communications imitating any form of legal process
Claiming the debt collector practices law unless they are a lawyer
Attempting to collect any additional fees or expenses the debtor isn’t legally obligated to pay
Threatening to sell the debtor’s obligation (account) to a third-party agency
Claiming the debtor owes more than they do on an account
Stating or implying that the debt collector is working on behalf of any state agency

Where to Make a Complaint in Delaware

Delaware’s Consumer Protection Unit investigates and prosecutes violations of the Consumer Fraud Act and other state and federal consumer protection laws. A private citizen can also bring an action for a violation of the Consumer Fraud Act within a year of the date of the alleged violation.

If debt collectors are harassing you, file a complaint with each of the following entities:

Delaware’s Attorney General’s office
Federal Trade Commission (FTC)
Consumer Financial Protection Bureau (CFPB)

READ MORE: How to deal with debt collectors

More Delaware Debt Statistics

Many residents struggle with consumer debts, including high-interest credit cards, student loans, and auto loans. Fortunately, there are many solutions for those seeking debt relief.

	Delaware average	National average
Average salary	$62,260	$59,428
Median household income	$72,724	$70,784
Per capita household income	$38,917	$36,430
Unemployment	4.1%	3.5%
Household debt	$61,490	$59,580
Auto loan debt	$21,585	$22,612
Credit card debt	$6,335	$6,194
Mortgage debt	$207,664	$236,443
Median mortgage payment (30-year fixed)	$1,585	$2,823
Average student loan debt	$37,559	$37,338
FICO credit score	714	714
Average VantageScore	696	701
Retirement savings	$454,679	$255,000
Child poverty	17.3%	5.2%
Overall poverty	9.4%	11.6%
2022 consumer bankruptcy filings	1,430	387,721
2022 foreclosures	598	248,170
Identity thefts reported	6,742	1,108,609
Percentage of unbanked residents	2%	4.5%
Average credit utilization ratio	25%	31%

Payday Lending Laws in Delaware: Legal

Interest Rate (APR): 521%
Minimum Loan Amount: N/A
Maximum Loan Amount: $1,000
Minimum Loan Term: N/A
Maximum Loan Term: 60 days
Number of Rollovers: Four
Finance Charges: Unlimited
Statute of Limitations: 3 years
Database Loan Tracking: Yes

Payday loans are covered by the Small Loan Act or Licensing Law.

READ MORE: How payday loans work

Debt Resources for Delaware Residents Facing Hardship

Delaware offers a variety of local and state programs for residents looking for help with debt or finances. Among other things, these resources can provide low-cost or free childcare, job-related education and training, healthcare, and legal aid. Some programs can also help with the cost of rent or utilities.

Some of the main food banks in the state include:

Food Bank of Delaware: 222 Lake Dr, Newark, DE; Phone: (302) 292-1305
DeLaWarr State Service Center – Food Closet-Food Pantry: 500 Rogers Rd, New Castle, DE 19720
Holy Cross Food Closet – Food Distribution Center: 631 S State St, Dover, DE; (302) 674-5787
Dover First SDA Hope Food Program – Food Pantry: 647 Wyoming Ave, Dover, DE; (302) 674-3680
Bay Shore Food Pantry: 113 Union St Suite B-6, Milton, DE; (302) 329-9872
Claymont Food Closet-Food Pantry: 3301 Green St, Claymont, DE; (302) 792-2757

How to File for Unemployment in Delaware

To apply for unemployment benefits in Delaware, you’ll need to provide the following:

Full legal name
Social Security Number
Mailing address and county of residence
Government ID (ex. driver’s license)
Employment history for the past 18 months
Most recent date of work

To start filing your claim online, visit this page and click “file now.”

State Hardship Programs

Delaware offers many grants, local, and government-run programs to those who need help with a financial crisis. These programs are designed to help eligible individuals, families, and children with things like:

Medical expenses
Legal assistance
Dealing with debt collectors
Rent and mortgage payments
Utility bills

If you’re seeking debt relief or bill payment assistance in Delaware, here are some of the best options.

Kinship Care: This program provides assistance for relative caregivers during the 90-day transition period when a child first moves into the non-parent caregiver’s home. This service is provided by the Division of State Service Centers (DSSC). For more information, please visit the DSSC website.
General Assistance: This is a state-funded program designed to provide cash assistance to low-income residents who do not qualify for federally funded programs, such as Delaware’s A Better Chance (DABC) or Social Security benefits.This service is provided by the Division of Social Services (DSS).
TANF: Temporary Assistance for Needy Families is Delaware’s primary cash assistance program. The goal is to provide temporary help until residents can get a job.
Family Planning: Delaware offers a wide range of reproductive health services and supplies to both women and men.
Screening For Life: Screening for Life provides payment for cancer screening test to qualified Delaware adults.
Tuberculosis Elimination Program: The Tuberculosis Elimination program provides screening, treatment and case management for tuberculosis infection and disease to clients of any age.
SNAP: In Delaware, SNAP is available to help low-income households subsidize their food costs. Apply for a reloadable card and use it like you would a debit card at most grocery stores.
WIC: The Women, Infants and Children program is designed to help certain people, including low-income women with young children, afford food costs. Most people who qualify for SNAP or TANF benefits also qualify for this program.
LIHEAP: The Low-Income Home Energy Assistance Program is federally funded and helps income-qualified families with heating and cooling costs.
CAFCP: The federal Child and Adult Food Care Program reimburses eligible organizations and daycare home providers for nutritious meals served in care settings. The program is administered by the U.S. Department of Agriculture.

Cost of Living in Delaware

Annual Mean Wage (All Occupations)	$71,091
Median Monthly Rent	$1,150
Value of a Dollar	$1.01
Cost of Living	108.1
Cost of Living Rank	20
Grocery Cost Index	103
Housing Cost Index	99.7
Utilities Cost Index	97.8
Transportation Cost Index	109.5
Miscellaneous Cost Index	103.9

Source: World Population Review (updated September 2023)

The Bottom Line

Delaware is one of the country’s smallest states, but residents are carrying a relatively large amount of debt. But the state also offers some debt relief and hardship programs to help residents, including debt settlement and debt consolidation. If you’re struggling, now is the time to take action. Rising interest rates will only make things worse in the short-term. A few simple steps can help you reboot your financial life and get back on track.

2023 Guide to Debt Consolidation and Relief in Delaware