Can I keep my jewelry if I file for bankruptcy in Alaska?

If you file for Chapter 7 bankruptcy in Alaska, you can keep up to $1,350 worth of jewelry and up to $4,050 of heirlooms.

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Whether you can keep jewelry, watches, and wedding rings in Alaska depends on what type of bankruptcy you file (Chapter 7 or Chapter 13) and how much the jewelry is worth. If you file for Chapter 13 bankruptcy, you can keep all jewelry items. In Chapter 7 bankruptcy, however, you can only keep up to $1,300 worth of jewelry. You can also keep family heirlooms up to $4,050, so if your ring, watch, necklace or other item of jewelry is an heirloom, you may be able to protect that as well.

Keeping Jewelry in Chapter 13 Bankruptcy in Alaska

In Chapter 13 bankruptcy, often called a reorganization bankruptcy, you enter into a repayment plan for three to five years. Your creditors get paid through the plan – some in full and some in part. Although a Chapter 13 plan requires a long commitment, the advantage is that you get to keep your property, including  jewelry. 

If you have very expensive jewelry however, that will probably affect how much you will be required to repay unsecured creditors.

Keeping Jewelry in Chapter 7 Bankruptcy in Alaska

Chapter 7 bankruptcy works differently. In Chapter 7, you must give up certain items of property. The bankruptcy trustee sells this property and uses the proceeds to repay (at least in part) your unsecured creditors.

Alaska Bankruptcy Exemptions

Not all of your property is up for grabs, however. Alaska (and all of the other states) has enacted laws that protect certain types of property. These laws are called exemptions. Some property is exempt no matter what the value, and other property is exempt only up to a dollar amount. The idea behind exemptions is that someone filing for bankruptcy should not be stripped of basic things needed for living – like shelter, clothing, furniture, a car, and the like. (Learn more about how bankruptcy exemptions work.)

Some states allow you to choose between the state exemption system and another set, called the federal bankruptcy exemptions. Whether you can use the federal bankruptcy exemptions in Alaska is a bit up in the air. Alaska law specifically states that people filing for bankruptcy can only exempt those items found in the Alaska bankruptcy exemptions. But on one occasion, a bankruptcy court allowed a debtor to use the federal bankruptcy exemptions.

If you want to use the federal bankruptcy exemptions, check with an Alaska bankruptcy attorney.

Keeping Jewelry Under the Alaska Bankruptcy Exemptions 

You can use the below exemptions to protect some, or all, of your jewelry if you file for Chapter 7 bankruptcy in Alaska. If you are married and filing a joint bankruptcy, you can double these amounts.

Alaska Jewelry Exemption

Alaska has a specific exemption that allows you to keep up to $1,350 worth of your jewelry.

Alaska General Personal Property Exemption

Alaska also allows you to exempt up to $4,050 total of books, musical instruments, clothing, family portraits, household goods, and heirlooms.

  • Family heirloom. If you have a ring, necklace, or other item of jewelry that is a family heirloom, you can keep it (assuming its worth less than $4,050) with this exemption. Keep in mind, however, that because you can only keep $4,050 total for all of these items, you may have to pick and choose what you wish to protect. For example, if you use $1,000 of this exemption to protect your trumpet, you’ll only have $3,500 left to protect your grandmother’s ring.
  • Clothing. Some courts in other states have ruled that moderately-priced watches are items of “wearing apparel,” so you might be able to exempt a watch under this category.

How to Value Jewelry in Bankruptcy

The value of your jewelry for exemption purposes is the amount you would have to pay, on the date you file for bankruptcy, to replace each item with a used item of similar age and in similar condition.  There are various methods of determining the replacement value, but for expensive jewelry you will almost always need an appraisal. (Learn more about how to value personal property in bankruptcy.)

Other Ways to Keep Jewelry in an Alaska Bankruptcy

If you want to keep nonexempt items of jewelry, the trustee may accept other items of exempt property in exchange for the jewelry. The trustee would then sell these items instead of your jewelry to repay your creditors.

Similarly, if you have some cash, you may be able to reimburse the bankruptcy trustee for the value of the jewelry you want to keep. Again, the trustee would use this money (instead of selling the jewelry) to repay unsecured creditors.

by: , J.D.

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