Whether you can keep jewelry, watches, and wedding rings in Georgia depends on what type of bankruptcy you file (Chapter 7 or Chapter 13), how much the jewelry is worth, and whether you need to protect other assets as well.
Keeping Jewelry in Chapter 13 Bankruptcy in Georgia
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 Georgia
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.
Georgia Bankruptcy Exemptions
Not all of your property is up for grabs, however. Georgia (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. But Georgia is not one of these states. If you file for bankruptcy in Georgia, you must use the Georgia bankruptcy exemptions.
Keeping Jewelry Under the Georgia Bankruptcy Exemptions
In Georgia, you can keep jewelry using the below exemptions. If you are married and filing a joint bankruptcy, you can double these amounts.
- Jewelry exemption. You can keep jewelry up to a total amount of $500.
- Wearing apparel exemption. Georgia lets you keep wearing apparel up to $300 per item (although keep in mind that this amount will count towards your overall exemption limit of $5,000 for all personal property items combined). Some courts across the nation have ruled that moderately-priced watches are “wearing apparel,” so you might be able to exempt a watch under this category. Check with a local bankruptcy attorney.
- Wildcard exemption. You can protect up to $600 of any property, and an additional $5,000 of any unused portion of the homestead exemption (the homestead exemption in Georgia, which you can use to protect equity you have in your home, is $21,500). You can use either, or both, of these wildcard exemptions to protect jewelry. (Learn more in The Georgia Wildcard Exemption in Bankruptcy.)
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 a Georgia 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.