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

You can keep rings, watches, and other jewelry in a Massachusetts bankruptcy, up to a certain value.

Whether you can keep jewelry, watches, and wedding rings in Massachusetts depends on what type of bankruptcy you file (Chapter 7 or Chapter 13), whether you use the Massachusetts or federal bankruptcy exemptions, how much the jewelry is worth, and whether you need to protect other assets as well. 

The Massachusetts exemptions have a specific exemption for jewelry, which allows you to keep jewelry up to a combined value of $1,225. And with the Massachusetts wildcard exemptions, you can protect up to another $6,000 in jewelry.  The federal exemptions also have jewelry and wildcard exemptions that you can use to keep rings, watches, and other jewelry in bankruptcy.

Keeping Jewelry in Chapter 13 Bankruptcy in Massachusetts

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 Massachusetts

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. 

Massachusetts Bankruptcy Exemptions

Not all of your property is up for grabs, however. Massachusetts 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.)

In Massachusetts, you can choose to use either the Massachusetts bankruptcy exemptions or another set of exemptions called the federal bankruptcy exemptions (17 other states and the District of Columbia also allow you to use the federal exemptions). Whichever set you choose, you must stick with it -- you cannot mix and match from each set. For this reason, it’s important to review all of the exemptions in each system. You wouldn’t want to pick one system in order to keep jewelry, only to lose your house. (Review the Massachusetts bankruptcy exemptions and the federal bankruptcy exemptions.) 

Using the Federal Bankruptcy Exemptions to Keep Jewelry

There are several provisions of the federal bankruptcy exemption system that you can use to keep your jewelry. If you are married and filing a joint bankruptcy, you can double these amounts.

Jewelry exemption. You can keep up to $1,550 of your jewelry. 

Wildcard exemption. You can keep up to $1,225 of any type of property, including your jewelry. If you don’t want to use the wildcard to protect other property, you can put the full $1,225 towards your jewelry. 

Unused homestead exemption.  If you don’t use the homestead exemption, or only use part of it, you can use up to $11,500 of the remaining amount for anything you want, including your jewelry. The federal homestead exemption is $22,975. 

Using the Massachusetts Bankruptcy Exemptions to Keep Jewelry

In Massachusetts, you can use the following exemptions to protect some items of jewelry. If you are married and filing a joint bankruptcy, you can double these amounts.

Jewelry exemption. In Massachusetts, you can exempt your jewelry up to a total value of $1,225. This includes wedding and engagement rings, watches, necklaces, and other jewelry combined. (Mass. Gen. Laws Ann. ch. 235, §34(18).)

Wildcard exemption. In Massachusetts you can exempt up to $1,000 in any type of property. In addition, if you don’t use the entire amount of the available motor vehicle, tools of the trade, or furniture exemptions, you can apply the remaining amounts (up to $5,000) to any type or property. You can use either or both of these wildcard exemptions to protect jewelry. (Mass. Gen. Laws Ann. ch. 235, §34(17).) (To learn more, see The Massachusetts Wildcard Exemption.)

How to Value Jewelry in Bankruptcy

The value of your jewelry for exemption purposes is the amount you would have to pay 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 Massachusetts 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.

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