Can I keep my jewelry if I file for bankruptcy in Virginia?

You can use Virginia’s bankruptcy exemptions to keep wedding rings, heirloom jewelry, and, if you use the wildcard exemption, other jewelry.

If you file for Chapter 7 bankruptcy in Virginia, you can exempt (keep) wedding rings, a modest watch, heirloom jewelry (up to $5,000), and perhaps other necklaces, bracelets, earrings, and rings if you choose to apply the Virginia wildcard exemption to those jewelry items. If you file for Chapter 13 bankruptcy in Virginia, you can likely keep all of your jewelry.

Keeping Jewelry in Chapter 13 Bankruptcy in Virginia

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 Virginia

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.

Virginia Bankruptcy Exemptions

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

Using the Virginia Bankruptcy Exemptions to Keep Jewelry

Virginia’s exemption scheme has several exemptions you can use to protect jewelry in bankruptcy. If you are married and filing a joint bankruptcy, you can double these amounts.

Wedding and Anniversary Ring Exemption

The Virginia exemptions allow you to keep wedding and anniversary rings, to an unlimited value, if you file for bankruptcy. Va. Code Ann. § 34-26(1a).

Wearing Apparel Exemption

If you file for bankruptcy in Virginia, you can exempt your wearing apparel, up to $1,000. Va. Code Ann. § 34-26(4). You will likely be able to keep a modest wristwatch using this exemption, and perhaps other jewelry items that you wear on a daily basis, like cufflinks. One Virginia bankruptcy court ruled that a debtor could exempt an ordinary watch under the wearing apparel exemption because he wore them on a daily basis and did not purchase them for investment purposes. Ditto for the debtor’s cufflinks, which the court found to even more clearly fall within this exemption since the debtor used them to hold his cuffs together. In re Meyer, 211 B.R. 203, 215 (Bankr. E.D. Va. 1997).

Heirloom Exemption

In Virginia, you can also exempt family portraits and heirlooms, up to a total value of $5,000.  Va. Code Ann. § 34-26(2). You can use this exemption to keep necklaces, bracelets, rings, earrings, and other jewelry items that are family heirlooms.

Your jewelry must meet four criteria in order for you to exempt it as an heirloom under this statute:

  • the jewelry piece is your personal property
  • the item has been passed down within your family for at least one generation
  • you intend to pass the jewelry on to a relative in the next generation, and
  • the item has sentimental value to you. In re Sempeles, 471 B.R. 178, 181 (Bankr. W.D. Va. 2012).

So, if your great grandmother’s ruby ring meets the above test, and its value is less than $5,000, you can use this exemption to keep it.

Wildcard Exemption

Virginia has two wildcard exemptions that you may be able to use to protect jewelry.

  • Unused homestead exemption. If you don’t use the homestead exemption, or only use part of it, you can apply the unused portion to protect items of personal property, including jewelry. Va. Code Ann. § 34-13. The Virginia homestead exemption (which you would normally use to protect your home) is $5,000 plus an additional $500 for each of your dependents. It’s $10,000 if you are over 65. Va. Code Ann. § 34-4.
  • Exemption for disabled veterans.  If you are a disabled veteran, you have an additional $10,000 that you can apply to any type of property, including jewelry. Va. Code Ann. § 34-4.1. How to Value Jewelry in Bankruptcy

How to Value Jewelry in Bankrutpcy

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 Virginia 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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