Updated May 20, 2016
Whether you can keep your jewelry if you file for bankruptcy depends on:
In Chapter 13 bankruptcy, you keep your property and repay all or part of your debts in a repayment plan that lasts for three to five years. Because you don’t lose property in Chapter 13, you’ll get to keep your jewelry.
If you have very expensive jewelry however, that will probably affect how much you will be required to repay unsecured creditors.
To learn more about Chapter 13 bankruptcy and the Chapter 13 repayment plan, see our Chapter 13 Bankruptcy area.
In Chapter 7 bankruptcy, you wipe out most or all of your debts. In return, the bankruptcy trustee will take and sell your nonexempt property in order to repay your unsecured creditors. (To learn more, see Chapter 7 Bankruptcy.) Whether you get to keep your jewelry in Chapter 7 hinges on whether you can claim it as exempt property.
All states have lists of exempt property – property you get to keep in bankruptcy. Some states allow you to use the federal bankruptcy exemptions instead. To find out if your jewelry is exempt, check your state exemption amounts, and if you can use the federal exemptions, check those as well.
(To learn more about exemptions, which states allow you to use the federal exemptions, exemptions amounts in your state, and more, see our Bankruptcy Exemptions area.)
Here are some exemptions that you may be able to use to keep your jewelry in Chapter 7 bankruptcy.
Jewelry exemptions. Some states have a special exemption for jewelry. If the value of your jewelry is equal to or less than the exemption amount, you’ll get to keep it. If it’s more, you may have to pick and choose what you keep. The federal system allows you to exempt up to $1,600 in jewelry.
Wildcard exemptions. Many states also have a wildcard exemption – an exemption that can be applied to any type of personal property. if your state has a wildcard, you can use it to protect jewelry. The federal exemption system has a $1,250 wildcard, and you can also apply any unused amount of the $11,850 homestead exemption to other property. (To learn more, see The Wildcard Exemption in Bankruptcy.)
Heirloom exemptions. Some states have an exemption for family heirlooms. You might be able to protect your great aunt’s ring with one of these exemptions.
Exemptions for wedding rings. Some states allow debtors to protect a wedding ring up to an unlimited value.
If you want to keep nonexempt items of jewelry and you have other exempt property that you can live without, you may be able to give the exempt property to the bankruptcy trustee in exchange for keeping your nonexempt jewelry.
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. The trustee will then use this money (instead of selling the jewelry) to repay unsecured creditors.