Business debt settlement companies in Delaware must know the state’s unique process for confessed judgments, which provides for two hearings before a funder can take anything. Choose a provider that can bring in Delaware counsel before the second motion day.
How does a confessed judgment work against you in Delaware?
Delaware still allows a funder with a warrant of attorney to have the Superior Court Prothonotary enter a confessed judgment, but the entry is only tentative. Under 10 Del. C. 2306(b), the Prothonotary cannot make the judgment final until the defendant receives certified-mail notice of an opportunity for a judicial determination of whether the defendant understandingly waived the right to notice and a hearing.
The letter, defined in Superior Court Civil Rule 58.1(d), notifies the defendant that he can appear in court on the second motion day after the letter was mailed to object. At that hearing, the funder has to prove that the defendant waived knowingly, intentionally, and voluntarily. In C & C Drywall Contractors North v. Aguilar, C.A. No. K24J-00450 JJC (Del. Super. Sept. 11, 2024), a Kent County Superior Court judge denied a $44,000 confessed judgment because the lender offered no facts on the signer’s sophistication, whether he consulted a lawyer, or his time to review the English-language note.
If the funder wins at the first hearing, Delaware automatically stays execution under 2306(j) until the defendant gets a second hearing, to raise defenses he did not know about when signing or that arose afterward. Rule 58.1(h) requires another notice letter before the first writ of execution issues. For more on these clauses, see Are Confessions of Judgment Still Legal?
What should you look for in business debt settlement companies in Delaware?
Make sure the company can work with Delaware counsel in time for the second motion day, which is when the funder is most vulnerable. Some questions to ask before signing are:
- Will the company hire a Delaware lawyer to appear in Superior Court before the second motion day?
- Will the lawyer check the funder’s filing for defects? For example, under 2306(c), if the signer lived outside of Delaware, the funder has to file a separate affidavit executed by the signer stating the sum, the county, the signer’s address, and the transaction’s contact with Delaware.
- Will the lawyer build a record showing you did not waive notice and hearing?
- Is the company selling you on a usury defense? As we explain below, that is usually a bad sign in Delaware.
Delaware’s Debt-Management Services Act only applies to services between an individual and his unsecured creditors, so it probably does not apply to settling an advance to an LLC.
Can you use usury against an MCA funder in Delaware?
Usually, no. Under 6 Del. C. 2306, corporations, LLCs, limited partnerships, and business trusts cannot raise usury as a defense in any action. Also, under 2301(c), there is no usury cap when the loan is for more than $100,000 and is not secured by a mortgage on the borrower’s principal residence. The narrow opening is an individual who signed on a smaller advance or one secured by a principal residence, where the remedy is three times the excess interest collected or $500, whichever is greater.
What assets of mine can the funder take if it gets a Delaware judgment against me personally?
Delaware has no homestead exemption outside of bankruptcy. Your assets are protected as follows:
| Asset | Protection for a Delaware resident | Source |
|---|
| Wages | 85% exempt; one attachment at a time; self-employment payments not counted as wages | 10 Del. C. 4913 |
| Retirement plans, life insurance, annuities | Exempt from execution and attachment | 10 Del. C. 4915 |
| Tools of trade | $75 in New Castle and Sussex Counties, $50 in Kent County | 10 Del. C. 4902(b) |
| Other personal property (head of family) | An additional $500 | 10 Del. C. 4903 |
| Home equity, bankruptcy only | Up to $200,000, plus $25,000 each for a vehicle, tools of trade and a wildcard | 10 Del. C. 4914 |
Property held by you and your spouse as tenants by the entirety cannot be reached by a creditor of only one spouse. This protection extends into bankruptcy under 11 U.S.C. 522(b)(3)(B). However, if your spouse co-signed the guarantee, this protection will not apply. If the funder sued you in New York, it can file its judgment with any Prothonotary and have it treated as a Delaware Superior Court judgment. However, you can raise defenses or seek to reopen the judgment under 10 Del. C. 4782.
Do Delaware's rules protect you if you only own a Delaware LLC?
Only partly. Delaware’s exemptions only apply if you live there, and its bankruptcy exemptions only if you are domiciled there. A Pennsylvania or New Jersey owner looks to home-state exemptions for the house, wages and bank accounts. However, Delaware limits the rights of your personal creditors to the charging order remedy in 6 Del. C. 18-703. A guarantee creditor can only get distributions, and that shield covers only your interest in the LLC. If the LLC sold its accounts receivable, the funder can seek to go directly after those accounts. A good provider should ask where you live before telling you what is and isn’t exempt. If you live in Pennsylvania, you may want to look at our guide to debt settlement companies in Pennsylvania.
Frequently Asked Questions
When does a Delaware confessed judgment become a lien?
If the funder wins the waiver hearing, the judgment is deemed entered on the day it was originally lodged, and its lien on your property will relate back to the hour and minute that the Prothonotary originally docketed it under 10 Del. C. 2303(b). Your time to settle starts the day the funder files the praecipe.
Does Delaware have a commercial financing disclosure law?
As of September 2026, no chapter on commercial financing or sales-based financing disclosure appears in the index to Title 6 or Title 5 of the Delaware Code. Therefore, you will not have the leverage of registration or disclosure as you may in New York, California, Virginia, or Utah.
How long does the funder have to sue me in Delaware?
Delaware has a three year statute of limitations for actions on a contract or promise, and six years for an action on a promissory note, under 10 Del. C. 8106 and 8109. However, the contract may pick another state’s law.
How much of my Delaware paycheck can the funder take?
If you live in Delaware, 85% of your wages are exempt from execution, and only one attachment can run at a time, pursuant to 10 Del. C. 4913. However, payments for self-employment are not wages, so draws that you take from your own company may not be protected.