When you make the decision to file for bankruptcy, you'll likely feel a wave of different emotions. People often begin to worry about what their future will look like and whether they'll be able to keep their home, car and other personal property. Many people, especially women, fear that during their bankruptcy, they'll lose important jewelry including engagement rings, wedding rings, and family heirlooms. The reality is that you will likely be able to keep many of your belongings depending on which type of bankruptcy you file for and the details of your case.
Jewelry in Chapter 13 Bankruptcy
Chapter 13 bankruptcy is often known as a reorganization bankruptcy. When you file for Chapter 13, you enter into a repayment plan for three to five years where you can pay all or a fraction of your unsecured debts. Although a Chapter 13 bankruptcy requires a long-term commitment, the upside is that you have the opportunity to keep all or some of your property – including jewelry. The best part is that you get to choose. It's important to note that if you have jewelry that is very expensive, you will need to work with your attorney on exemption planning as the value of your jewelry may affect how much you're required to repay your creditors.
Jewelry in Chapter 7 Bankruptcy
Chapter 7 bankruptcy works differently than a Chapter 13 bankruptcy. Chapter 7 is a liquidation proceeding in which the bankruptcy trustee may sell your non-exempt assets in order to pay back the debt to your creditors.
However, not all of your property is up for grabs. Florida has laws that protect certain types of property, and these are known as exemptions. Some property is exempt regardless of the value while other property is only exempt up to a certain dollar amount. The idea behind this is that the Bankruptcy Court doesn't want you to be stripped of certain things that you need in order to survive, such as shelter, clothing, a car, etc. In other words, Florida's exemption laws allow you a certain amount of personal property to achieve a fresh start. Unfortunately, in my opinion, Florida's personal property exemptions are antiquated and need to be revised upward.
Unlike other states, Florida doesn't have a specific exemption when it comes to jewelry, but there is a general personal property exemption that allows you to keep up to $1,000 worth of any type of personal property such as clothing, jewelry, wedding rings, furniture and more. Vehicles are not included in this exemption as Florida has a separate exemption for motor vehicles. This amount may be doubled if you're married and are filing for a joint bankruptcy case. It's important to keep in mind that these amounts apply to all of your personal property as a whole, meaning that if you want to protect $500 worth of furniture, you'll only have $500 left for jewelry. Florida also has a wildcard exemption that you must qualify for. If you qualify, you are allowed to exempt up to an additional $4,000 of property per person. Please speak to your Attorney to see if you qualify.
The value of jewelry for exemption purposes is the amount you would pay to replace each item with a used item of a similar age and in similar condition. If you own more expensive jewelry, you'll almost always need to get an appraisal in order to determine the value.
Other Ways to Keep Jewelry in Bankruptcy
If you want to keep nonexempt items of jewelry, your bankruptcy trustee may accept other items that are considered exempt property in exchange for the jewelry. Your trustee would then sell those other items instead of your jewelry in order to pay back your creditors. This isn't a guarantee, and it varies from case to case.
If you're in the process of filing for bankruptcy and aren't sure whether your jewelry will be exempt, the best thing you can do is to speak with your bankruptcy attorney. They'll be able to help you determine whether you'll be able to keep your jewelry when you file for bankruptcy.