Bankruptcy itself is normally an emotional time for most people, and it can get more emotional when they have visions of someone coming in their house and taking their personal property.  As we discussed in this post, that is simply not reality and the great majority of people filing for Bankruptcy do not lose any personal property to the Chapter 7 Trustee.  The chances of losing furniture, household goods, clothing or other personal items is even slimmer because most people simply do not have property that can be sold for several thousand dollars over and above the available exemptions.  One category of items deserves special attention: engagement rings, wedding rings and other heirloom jewelry.  These items often have significant monetary value and sentimental value, and people often hold onto these items even if times are bad.  The good news is still that very few people lose any personal property to the Chapter 7 Trustee! Trustees do not really want to take your personal jewelry.  Even if there is some unexempt value in the jewelry, it is rare that they are worth enough for a Trustee to go to the trouble of selling them (yes, sometimes even if they are worth a few thousand dollars).  Finally, even if there is enough value for the Trustee to consider selling, almost all will first try to make a deal with the debtors to “buy back” the items at a discount (as it saves the Trustee the fees and expenses of liquidating the items).

It is very important that clients disclose their personal property to a good Bankruptcy lawyer early in the process (usually the first or second meeting), especially for potentially valuable items like jewelry.  This allows us to plan on how to use the available exemptions.  Exemptions for jewelry and other personal items vary from state to state.  In Georgia, the exemption for personal jewelry is $500 total (or $1000 for a joint case), plus any unused portion of the wildcard exemption ($600 per person, plus up to $5,000 per person if the homestead exemption is not fully used).  For other states, has a list of exemptions by state.  Importantly, many online resources are outdated so it is important to discuss property and exemptions with a lawyer.  In addition, exemption planning is a very important part of a Bankruptcy filing.  Good lawyers know how to allocate the exemptions (especially wildcard exemptions) to best protect the property (from most to least important to the client).  For example, we often will not fully exempt one item and and instead spread the exemptions around so that each item has too little equity for the Trustee to sell.  Again, this comes with expertise and experience and in many cases good exemption planning alone will pay for the lawyer.

One final point: If you have jewelry that has been financed and the jeweler or finance company has a security interest in the items, the analysis is a little different.  The creditor will expect to get their regular payments or they may seek to repossess the collateral.  A Trustee will have no interest in the items unless they can be sold for significantly more than the claim of the secured creditor plus the exemptions.