Whether you can keep wedding rings, watches, necklaces, bracelets, or other jewelry in a Nevada bankruptcy depends on whether you file for Chapter 7 or Chapter 13 bankruptcy, how much your jewelry is worth, whether any items are family keepsakes, and the value of other personal property you want to protect.
Keeping Jewelry in Chapter 13 Bankruptcy in Nevada
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 Nevada
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.
Nevada Bankruptcy Exemptions
Not all of your property is up for grabs, however. Nevada (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 Nevada is not one of these states. If you file for bankruptcy in Nevada, you must use the Nevada bankruptcy exemptions.
Using the Nevada Bankruptcy Exemptions to Keep Jewelry
In Nevada, you can keep some or all of your jewelry using the below exemptions. If you are married and filing a joint bankruptcy, you can double these amounts.
Jewelry exemption. If you file for bankruptcy in Nevada, you can keep the following property to a combined total value of $5,000: jewelry, books, works of art, and musical instruments. Nev. Rev. Stat. §21.090(10(a). You may have to pick and choose which property you claim as exempt. For example, if you choose to keep a piano worth $3,000, then you cannot keep a wedding ring worth $3,000 (unless you also use the wildcard exemption and/or pay the trustee the difference in cash – these options are explained below).
Wearing apparel exemption. Nevada allows you to keep the following property to a combined total value of $12,000: wearing apparel, appliances, household goods, furniture, and home and yard equipment. Nev. Rev. Stat. §21.090(1)(b). Some bankruptcy courts in other states have rules that similar wearing apparel exemptions include watches. It’s possible you could exempt a watch or another item of jewelry using the Nevada wearing apparel exemption, although it’s also possible that a court would rule otherwise, since Nevada already provides a separate exemption for jewelry. Check with a local bankruptcy attorney.
Family keepsake exemption. In Nevada, you can keep family pictures and keepsakes to an unlimited value. Nev. Rev. Stat. §21.090(1)(a). It’s possible that you could keep a family wedding ring under this exemption, or another item of jewelry that could be considered a family keepsake, such as your grandmother’s ruby necklace. Again, check with a local bankruptcy attorney to see how this plays out in your bankruptcy court.
Wildcard exemption. Nevada has a wildcard exemptions which allows you to exempt up to $1,000 or any personal property of your choosing. Nev. Rev. Stat. §21.090(1)(z). You can use some or all of the wildcard exemption to protect jewelry 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 a Nevada 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.