Many people call our bankruptcy law firm to schedule an appointment and discuss options for filing bankruptcy. During these appointments, it is common to hear questions like, “Can I keep my jewelry if I file for bankruptcy in California?” The answer depends on the exemptions one is claiming and the other assets that a person owns.
Understanding exemptions
Exemptions determine what property an individual can keep. While it is possible to choose between state exemptions and federal exemptions in other states, it is not possible to do so in California. In California, the exemptions a debtor must choose from are set by the state legislature.
California offers two types of exemptions, number one and number two. People cannot mix and match the exemptions from between the two systems. Thus, it is important to select the one that is going to protect the greatest amount of property and assets. Since these can be complex decisions to make, it is wise to discuss them with the bankruptcy attorney prior to making a final decision.
Each situation is different
It really comes down to the type of assets that someone has and is trying to protect. Those who have a lot of equity in their home may opt to use the system one exemption. The section one exemption allows for up to $175,000 of home equity to be exempt from the bankruptcy filing. However, since it focuses on home equity, it does not allow for a lot of personal property to be exempt. On the contrary, system two is often a better option for those who have less than $26,000 home equity but have more assets in the personal property like jewelry.
If someone chooses system two, it is possible to take advantage of the wildcard exemption to keep some personal jewelry. If the jewelry is valued at more than the wildcard exemption of around $1,400, and there is no home equity or very little of it, people can use any remaining homestead exemption as well. This exemption allows debtors to exempt up to $28,000 for personal property like jewelry.
Work with a lawyer
Filing for bankruptcy is a complicated process and it is important to work with an attorney who can go over the details of exemptions and make it possible to determine which system is the right one in a particular situation. Many factors must be weighed beyond the family jewelry collection in order to make the correct decision.
However, if keeping the jewelry is the most important factor in the entire process, make sure to explain this during a consultation. It is necessary for an attorney to understand what the priorities are so that he or she can make recommendations with that in mind.
Two types of bankruptcy
Ultimately, if a jewelry collection is much higher than the exemptions will allow for, it may be necessary to file a Chapter 13 Bankruptcy instead of Chapter 7. These are the two main types of personal bankruptcy filings. Chapter 7 eliminates most unsecured debt by discharging them.
However, a Chapter 13 Bankruptcy creates a repayment plan that allows for some money to be paid towards the debt with the remaining amount being discharged at the end. Since Chapter 13 makes room for people to pay creditors, it is possible to keep more assets as well.
Schedule an appointment
To learn more about this process or your options, call our office and schedule a consultation right away.
Note: This is for information only and does not constitute legal advice.