Rep. Paul Baumbach, D-Newark.

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By Joseph Edelen

DOVER — Delaware’s bankruptcy threshold has not been increased since 2012, but under a new proposal passed by the House of Representatives on Tuesday, that could change.

House Bill 318, sponsored by Rep. Paul Baumbach, D-Newark, would raise the exemption for bankruptcy and other debt proceedings related to an individual’s home from $125,000 to $200,000.

The measure also increases the exemption for vehicles and tools of the trade – a term for the equipment related to an individual’s employment – from $15,000 to $25,000.

The Newark Democrat explained his proposal is a way to ensure Delawareans can keep their vehicles, employment and a roof over their head amidst rising costs over the last decade, and to ensure individuals are “able to emerge from bankruptcy more swiftly and get back on their feet.”

“A large number of Delawareans are one car accident, one illness away from bankruptcy,” Rep. Baumbach said during the bill’s March 27 committee hearing. “It’s past time… especially (with) the increases in the price of real estate in Delaware.”

Under an additional clause in the legislation, worker’s compensation from other states would be exempt from attachment in bankruptcy proceedings in Delaware.

Rep. Baumbach explained this part of the bill builds off similar exemptions for in-state workers but would extend to out-of-state workers who may be working in nearby states.

“If you worked in Maryland, across the border, then that workers’ comp could be taken away from you and prevent you from getting your way back to economically solvent again,” he said. “We want … to make sure that we treat other states’ workers’ comp as Delaware’s workers’ comp, and then also bring the dollar limits up to the current level.”

There was no debate on the measure during its March 27 House Judiciary Committee hearing and its consideration on the House floor Tuesday. While on the floor, the bill was amended with technical corrections to align the legislation with workers’ compensation laws in other states and U.S. territories.

After a roll call vote in the chamber, the measure received near-unanimous passage, with Rep. Stephanie T. Bolden, D-Wilmington, not voting on the proposal due to a conflict of interest.

House Bill 318 with House Amendment 1 now heads to the Senate for further consideration.