Many New Yorkers who are considering filing bankruptcy often ask “What will happen to my jewelry?” It’s a good question because the precious metals we adorn ourselves with are often the third most valuable type of assets people typically have after houses and cars. There also often the first type of assets that people pawn to pay bills, but this post gives a few points on why that shouldn’t be necessary.
To begin with, New York allows debtors to exempt $1,000 in jewelry, and those who don’t take a homestead exemption can use a $1,000 wildcard exemption on jewelry. The federal exemptions, of which New Yorkers can avail themselves, offer a $1,450 jewelry exemption and up to $10,825 in the leftover homestead exemption. Non-homeowners and homeowners whose mortgages are underwater can use up to $10,825 instead of the homestead exemption and $1,150 in a wildcard exemption.
It’s tempting but do not omit jewelry from your bankruptcy schedules and do not neglect to tell your bankruptcy lawyer about them. If the bankruptcy trustee finds out, you will likely lose the jewelry, and your case might be jeopardized. Instead, have your jewelry appraised by a competent appraiser. You might find that the items are worth more than you thought (or less), just don’t trust what appraisers say about bankruptcy law regarding jewelry. That’s where lawyers are the experts.
The good news is that the situation is probably in your favor. Jewelry is not easy for trustees to liquidate because doing so requires finding interested buyers, and in a depressed economy, there aren’t likely to be many. Trustees prefer things like stocks and bonds, not rocks, and if the exemption took enough of the value away from the trustee, it might not be worth selling at all. The even better news is that debtors have six months to pay for the remaining value of any jewelry after exemptions are taken into account.
Beyond that, it’s true the jewelry exemptions aren’t going to protect large collections. They appear designed to ensure that people won’t lose their wedding rings in bankruptcy. Losing a few pieces pales to the benefits of discharging your debts. Otherwise, jewelry is one of the many reasons to hire an experienced bankruptcy lawyer, especially in New York where debtors need to weigh the benefits of the state versus federal exemptions.
For more questions about jewelry in bankruptcy, exemptions, the automatic stay, effective strategies for dealing with foreclosure, and protecting your assets in bankruptcy please feel free to contact experienced New York Bankruptcy Bruce Weiner for a free initial consultation.
