Can I keep my jewelry if I file for bankruptcy in Rhode Island?

You can use the federal bankruptcy exemptions or the Rhode Island exemptions to keep jewelry, up to a certain dollar amount, in Chapter 7 bankruptcy.

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You can keep wedding rings, watches, necklaces, and other jewelry, up to a certain total value, if you file for Chapter 7 bankruptcy in Rhode Island. The total dollar value that you can keep depends on what whether you use the Rhode Island or federal bankruptcy exemptions, how much the jewelry is worth, and whether you need to protect other assets as well. If you file for Chapter 13 bankruptcy in Rhode Island, you can keep all of your jewelry.

Keeping Jewelry in Chapter 13 Bankruptcy in the Rhode Island

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 Rhode Island

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.

Rhode Island Bankruptcy Exemptions

Not all of your property is up for grabs, however. The Rhode Island 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 Rhode Island, you can choose to use either the Rhode Island bankruptcy exemptions or another set of exemptions called the federal bankruptcy exemptions (17 states plus 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 Rhode Island 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 Rhode Island Bankruptcy Exemptions 

If you use the Rhode Island exemptions, you can use the following exemptions to protect jewelry. If you are married and filing a joint bankruptcy petition, you can double these amounts.

  • Jewelry exemption. Rhode Island has a specific exemption for jewelry. You can exempt jewelry up to an aggregate value of $2,000. R.I. Gen. Laws Ann. § 9-26-4(14).
  • Wearing apparel exemption. You may also exempt all necessary wearing apparel. One Oregon court has defined “necessary” as any item of apparel that is necessary in ordinary circumstances and not a superfluous luxury. Arch Lumber Co. v. Dohm, 98 A.2d 840, 842 (R.I. 1953). Some courts in other states have interpreted similar wearing apparel exemption statutes to include modest watches and other such items. It’s possible you could use the Rhode Island wearing apparel exemption to do the same. Check with a local bankruptcy attorney.
  • Wildcard exemption. Rhode Island has a wildcard exemption that allows you to exempt up to $6,500 of any type of property. R.I. Gen. Laws Ann. § 9-26-4(16). You can use some, or all, of this exemption to keep jewelry.

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 Rhode Island 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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