Whether you can keep wedding rings, watches, necklaces, bracelets, or other jewelry in a South Carolina bankruptcy depends on whether you file for Chapter 7 or Chapter 13 bankruptcy, how much your jewelry is worth, and how much other personal property you want to protect.
Keeping Jewelry in Chapter 13 Bankruptcy in South Carolina
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 South Carolina
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.
South Carolina Bankruptcy Exemptions
Not all of your property is up for grabs, however. South Carolina (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 South Carolina is not one of these states. If you file for bankruptcy in South Carolina, you must use the South Carolina bankruptcy exemptions.
Using the South Carolina Bankruptcy Exemptions to Keep Jewelry
In South Carolina, 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 South Carolina, you can keep jewelry up to a total combined value of $1,175. S.C. Code Ann. § 15-41-30(4).
Personal property exemption. South Carolina also allows you to keep the following property to a combined total value of $4,650: wearing apparel, appliances, animals, crops, household goods, furnishings, and musical instruments. S.C. Code Ann. § 15-41-30(3).
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 South Carolina wearing apparel exemption, although it’s also possible that a court would rule otherwise, since South Carolina already provides a separate exemption for jewelry. Check with a local bankruptcy attorney.
Wildcard exemption. South Carolina has a wildcard exemption which allows you to apply unused exemption amounts to any type of property, up to a $5,825 maximum. You can use some, or all, of this amount to keep jewelry. S.C. Code Ann. §15-41-30(7).
Note: Most likely, these exemption amounts will be adjusted on July 1, 2014 in the State Register.
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 South Carolina 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.