Can I keep my jewelry if I file for bankruptcy in New York?
You can use New York bankruptcy exemptions to keep jewelry, watches, and wedding rings, up to a certain dollar amount.
Whether you can keep jewelry, watches, and wedding rings in New York depends on what type of bankruptcy you file (Chapter 7 or Chapter 13), whether you use the New York or federal bankruptcy exemptions, how much the jewelry is worth, and whether you need to protect other assets as well.
Keeping Jewelry in Chapter 13 Bankruptcy in New York
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 New York
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.
New York Bankruptcy Exemptions
Not all of your property is up for grabs, however. New York (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.)
In New York, you can choose to use either the New York 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 New York bankruptcy exemptions and the federal bankruptcy exemptions.)
Keeping Jewelry Under the Federal Bankruptcy Exemptions
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.
Keeping Jewelry Under the New York Bankruptcy Exemptions
In New York, 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, a watch, and artwork with an aggregate worth of $1,000. This means that if you want to keep a $300 watch and a $200 oil painting, you’ll have $500 left for your jewelry. There’s one caveat, however: Your total personal property exemption for things like books, clothing, furniture, animals, and tools of the trade is $10,000. So if you use $10,000 to protect your furniture, you won’t have anything left over to protect your jewelry.
- Wedding ring exemption. You can keep one wedding ring. This is subject to the caveat above, however.
- Wildcard exemption. If you haven't used the homestead exemption, you can protect up to $1,000 of any type of personal property, bank account, or cash on hand. You may use some or all of this to exempt jewelry. (Learn more about the New York Wildcard Exemption.)
Other Ways to Keep Jewelry in New York 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.