Can I keep my jewelry if I file for bankruptcy in South Dakota?

You can use South Dakota’s wildcard exemption to protect your jewelry, up to a certain dollar amount, in bankruptcy.

Although South Dakota does not have a specific bankruptcy exemption for jewelry, it does have a wildcard exemption which allows you to protect up to $5,000 ($7,000 if you are the head of household) of any personal property, including jewelry. You can also keep a moderately-priced watch using the South Dakota wearing apparel exemption. Read on to get the details.

Keeping Jewelry in Chapter 13 Bankruptcy in South Dakota

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 Dakota

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 Dakota Bankruptcy Exemptions

Not all of your property is up for grabs, however. South Dakota (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 Dakota is not one of these states. If you file for bankruptcy in South Dakota, you must use the South Dakota bankruptcy exemptions.

Using the South Dakota Bankruptcy Exemptions to Keep Jewelry

Unlike many states, South Dakota does not have a specific exemption for wedding rings or other jewelry. However, you can keep jewelry using two other South Dakota exemptions. If you are married and filing a joint bankruptcy, you can double these amounts.

Wearing apparel and clothing exemption. The South Dakota exemptions allow you to keep all of your wearing apparel and clothing in bankruptcy. S.D. Codified Laws § 43-45-2(5). In a case from the 1800s, a bankruptcy court allowed a bankruptcy debtor to keep a moderately-valued watch and chain under the wearing apparel exemption, noting that the debtor “habitually” wore the watch. Brown v. Edmonds, 66 N.W. 310 (S.D. 1896). The court further reasoned that the normal definition of wearing apparel includes ornamentation along with clothing. As such, said the court, a hat or watch, which is “worn” by the debtor comes under this exemption. If you file for bankruptcy in South Dakota, you will likely be able to keep a moderately-priced watch, and possibly other jewelry items that you habitually wear. Check with a local bankruptcy attorney.

Wildcard exemption. South Dakota has a wildcard exemption that you can apply to any type of property in bankruptcy including jewelry. If you are the head of your family, you can use this wildcard to exempt up to $7,000 of property. If you are not the head of your family, the cap is $5,000. S.D. Codified Laws § 43-45-4.

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 Dakota 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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