Can you keep your bling following bankruptcy filing?

Bankruptcy Lawyer Bryan W. Stone answers the question: “Can I keep my house if I file bankruptcy?”


We’ve previously discussed the impact that filing bankruptcy can have on some items of personal property, including things like houses and cars. As we mentioned, what and how much you’re able to hold on to typically depends on the type of bankruptcy filed, the value of the items in question and what the bankruptcy exemption rules say on the subject. Another item many people are curious about is jewelry. Whether it’s a family heirloom or a wedding ring, these items can have special sentimental value and the prospect of having to part with them can be very upsetting. To learn more about how jewelry is dealt with in bankruptcy, keep reading.


Diamond rings Charlotte Bankruptcy LawyerJust recently a bankruptcy court in Maine dealt with this exact issue. Though the Maine court’s ruling won’t impact North Carolina regulations, it’s an interesting decision worth understanding. In the Maine case, a woman claimed that the total value of her wedding and engagement rings should be exempt under Main law. The two rings were worth a combined $5,200, which exceeded the $750 maximum jewelry exemption listed under Maine law.


The trustee objected to her exemption claim and said both items should be forfeited. The court listened to both sides and ultimately sided with the debtor, arguing that Maine’s law actually treated jewelry in two different ways. First, there is a $750 exemption for personal jewelry items. Separate and apart from this is an exemption for wedding and engagement rings, otherwise known as rings “connected to the institution of marriage”. The court said that state law did not include a limit on the value of these wedding and engagement rings, meaning that they can be exempted up to an unlimited amount of money.


The Court made clear that, at least in Maine, the woman is entitled to have both pieces of jewelry exempted without any limit, a real windfall for those bankruptcy filers with expensive jewelry collections. The ruling sets Maine apart from many states, even those located in New England. In Massachusetts, filers can choose to use exemptions under federal law which allow for up to $1,600 in jewelry to be exempted. In New Hampshire, only $500 in jewelry can be exempted.


So what about here in North Carolina? The answer first depends on what type of bankruptcy is filed. If you’re filing a Chapter 13 bankruptcy, you don’t need to worry about selling any of your jewelry. Under a Chapter 13, you agree to a payment plan to repay creditors and there is no need to liquidate any of your personal assets. If you file a Chapter 7 bankruptcy, then you may need to sell certain items, including jewelry.


What about exemptions? First, there is no possibility to choose the more generous federal bankruptcy exemptions we mentioned earlier. In North Carolina, you must use North Carolina bankruptcy exemptions. Unfortunately for those with wedding or engagement rings, there is no clear exemption as exists in Maine. In fact, North Carolina does not have any exemption that deals specifically with jewelry.


One category that can be used to cover jewelry is the “wearing apparel” exemption. This allows you to exempt up to $5,000 in personal property, including things like household goods, furniture, wearing apparel and other items. Be careful, as this will need to be used to exempt other things you may need post-bankruptcy and you might not want to use the entire amount on your jewelry. Another option is to use the wildcard exemption, which allows you to shield up to $500 in property. If you haven’t used the full homestead exemption, you can use up to $5,000 of that too.


A final approach to protecting your jewelry in the event of a bankruptcy is to consider a trade. Most trustees will allow you to keep certain items if you’re willing to offer up others in its place. This means if you have a valuable piece of exempted property you will likely be able to trade it in exchange for holding onto your jewelry.


If you are contemplating bankruptcy in the Charlotte area, please call the skilled lawyers at Arnold & Smith, PLLC find additional resources here. As professionals who are experienced at handling all kinds of bankruptcy matters, our attorneys will provide you with legally sound advice for your particular situation.


About the Author

Kyle Frost Bankruptcy Lawyer Student loan attorneyKyle Frost joined Arnold & Smith, PLLC in 2013 where he focuses his practice on all aspects of civil litigation and bankruptcy, including: Chapter 7, Chapter 11, Chapter 13, home loan modifications and landlord-tenant issues.

Born and raised in upstate New York, Mr. Frost attended the University at Albany on a Presidential Scholarship, graduating magna cum laude with a double major in Political Science and Sociology.  He went on to attended Wake Forest University School of Law in Winston Salem, North Carolina.

Following college, Mr. Frost spent over a year teaching English in South Korea. He worked in a private school in Seoul developing curriculum, English programs, and educating both children and adults that were interested in learning a new language.

In his spare time, Mr. Frost enjoys homebrewing, fishing, and travelling.





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