Can I keep my Jewelry if I file for Bankruptcy in Orange County or Riverside, California?
Using California Bankruptcy Exemptions to Keep Jewelry in Chapter 7
Many people tend to call Chapter 7 Bankruptcy liquidation. They call it liquidation because the Bankruptcy Trustee will sell your assets to pay your creditors. However, in most bankruptcy cases, no property is every liquidated. This is because of what we call Bankruptcy Exemptions. In short, exemptions are derived from laws to protect certain types of property. Most of these property are necessary to live. Such as clothes, household furniture, appliances and vehicles.
In California there are also exemptions to protect a certain amount of jewelry. There are a number of different laws that will allow you to protect certain types of property and assets. There are specific exemptions that protect only jewelry, while other exemptions can be used on all kinds of property including jewelry. Therefore, if you have jewelry that you must keep, you should not necessarily rule out bankruptcy as a debt relief option. You should discuss these exemptions with your bankruptcy attorney to ensure that you will be able to save your jewelry from liquidation in the event that you decide to file bankruptcy.
Buy Back your Jewelry
In a Chapter 7, you can also “buy back” your jewelry. For example, if you have $10,000 in unexempt equity in your jewelry, the Bankruptcy Trustee has the option to liquidate to recover $10,000 to pay towards your creditors. However, you can negotiate with the trustee to buy back the jewelry. In this case, instead of selling your jewelry to someone else, the trustee is essentially selling your jewelry back to you. The trustee can then use the money to pay towards your creditors.
There is no liquidation of your jewelry in a Chapter 13.
A Chapter 13 is referred to as a repayment plan or restructuring of your debt. Chapter 13 allows you to structure a 3 to 5 year payment plan to get out of debt. There is no liquidation in Chapter 13. Therefore, you would be able to keep your jewelry. However, keep in mind, the payment plan can sometimes be based off of the amount of assets or equity you have in your property. Therefore, if you jewelry is extremely expensive, your Chapter 13 payment might be too high to keep up with.
Can I Keep Jewelry If I Still Owe Money for It?
If you owe a debt that is secured by the jewelry then you will need to keep paying the debt off to keep the jewelry. For example, if you have an engagement ring that you purchased using the retailers credit card, it is likely that the debt is secured by the ring. In this scenario, to keep the engagement ring, you must continue to pay back the secured debt. You should contact a bankruptcy attorney to get more information about all the bankruptcy nuances.