By: Jeena Cho

“Can I keep jewelry in bankruptcy?” is a common question clients ask me. Just because you are filing for bankruptcy does not necessarily mean you have to give up that precious piece of jewelry. There are several factors to consider when determining if you can keep jewelry in bankruptcy.

1. How much is it worth?

The first thing you must determine is the value of the jewelry. Remember, it’s not value to purchase it new, but the value in its current condition. Ask yourself - how much can I get for this at a pawn shop? Or ebay? It may be worthwhile (depending on how expensive the jewelry is) to get it appraised.

2. Can I exempt it?

The next issue is if you can exempt or keep the item. In Chapter 7 bankruptcy, you are only entitled to keep so much property. In California, there is a generous exemption scheme. For jewelry, there is a separate exemption of $1,350. What happens if the jewelry you want to keep is worth more than $1,350? Assuming you do not own real estate, or do not have equity in your home, you can use the 703 “Wild Card” exemption. The Wild Card allows you to keep up to $21,825 of property. See: Exemption. If you have other property you need to exempt, such as equity in your vehicle in excess of $3,300, or money in your bank account, those items need to share in the Wild Card exemption as well.

Caution about transferring property. Be cautious about transferring property prior to bankruptcy, especially if you do not get fair market value for the property. For instance, transferring the jewelry to a friend or a family member for less then the fair market value may be considered fraudulent and the Trustee can go after the friend or family member. It may also be grounds for dismissing your bankruptcy case.

For more information, download our free guide: Ten Things You Must Know, And The Mistakes You Must Avoid, In Solving Your Financial Situation

Disclaimer: It’s a bad idea to self-diagnose a medical condition and the same is true for legal issues. The articles contained in our blog is for informational use only. We are a California law firm and our practice is limited to California. The laws may be different in your state. Please consult with a San Francisco bankruptcy attorney for advice specific to your case.

 

Do you have questions? Come in for a consultation. Contact us.

• Tweet