Whether you can keep wedding and engagement rings, watches, necklaces, and other jewelry in Missouri depends on what type of bankruptcy you file (Chapter 7 or Chapter 13) and how much the jewelry is worth.
Keeping Jewelry in Chapter 13 Bankruptcy in Missouri
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 Missouri
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.
Missouri Bankruptcy Exemptions
Not all of your property is up for grabs, however. Missouri (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 Missouri is not one of these states. If you file for bankruptcy in Missouri, you must use the Missouri bankruptcy exemptions.
Using the Missouri Bankruptcy Exemptions to Keep Jewelry
In Missouri, you can keep jewelry using the below exemptions. If you are married and filing a joint bankruptcy, you can double these amounts.
Wedding and engagement rings exemption. In Missouri, you can protect up to $1,500 worth of wedding rings. Mo. Ann. Stat. §513.430(2). A Missouri bankruptcy court ruled that the wedding ring exemption also extends to engagement rings. In re Urie, 2006 WL 533514 (Bankr. W.D.Mo. 2006).
Jewelry exemption. You can keep additional jewelry with a combined value of up to $500. Mo. Ann. Stat. §513.430(2)
Wildcard exemption. Missouri also has several wildcard exemptions that allow you to protect a certain dollar value in any type of property.
- All bankruptcy filers can protect up to $600 of any type of property. Mo. Ann. Stat. §513.430(3)
- Heads of household can also protect $1,250 of any type of property property, plus an additional $350 per child under the age of 21. Mo. Ann. Stat. §513.440 (Learn more in The Missouri 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 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 Missouri 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.