Will You Lose Your Wedding Ring if You File for Bankruptcy?
The popular HBO show “Big Little Lies” had an interesting bankruptcy-related story line. Renata Klein and her husband filed for bankruptcy after her husband was arrested for securities fraud. However, when Renata filled out her paperwork, she did not list her family’s vehicle or her wedding ring.
Of course, a debtor must list all their assets and all their debts on the paperwork they file with the court. And this includes wedding rings and engagement rings. Many people who are thinking of filing ask whether they will lose their wedding or engagement ring when they file. The answer is actually, “it depends” and could very possibly be “yes.” Although the fictitious Renata Klein lives in California, her case would be analyzed similarly under Florida law.
Rings are assets that have monetary value, so you must list them when you file. Because they have value, a trustee could sell them and distribute the proceeds to your creditors.
However, Florida has a list of exemptions you can claim, which will keep the assets away from the trustee. There is no specific exemption for a wedding or engagement ring, unfortunately, although there are specific exemptions for health aids and for retirement accounts. However, every debtor gets up to $1,000 in personal property they can exempt. This is called the “wildcard” exemption and you can use it for your wedding or engagement ring.
The amount of the wildcard exemption can rise to $4,000 if you do not use the Florida homestead exemption. Florida allows most residents to exempt the full value of their residence, but if you don’t own your residence, you can’t use it. To make up for that, the state bumps up the wildcard exemption to $4,000.
Will this be enough to cover the full value of your rings? Maybe, maybe not. Remember, the rings are valued by what you could get if you hocked them at a pawn shop today. They are not valued based on how much you originally paid for them. So the value of the rings might have declined over the years.
Should You Exempt Your Rings?
Whether or not you should exempt your rings is another question entirely. Let’s say you only get a $1,000 wildcard because you are using the homestead exemption. You might need that $1,000 for other items. You need to decide what is more important to you and apply the wildcard exemption to the most important possessions.
You also have another option if you want to hold onto your rings: file for Chapter 13 bankruptcy. With this option, you don’t lose any property. Instead, you pay your disposable income each month to your creditors for 3-5 years. At the end of the repayment plan, your debts get wiped out. Chapter 13 has some other advantages over Chapter 7, which you should discuss with an attorney.
Reach out to a South Florida Bankruptcy Lawyer
Nowack & Olson has represented the South Florida community for years, and our Plantation bankruptcy attorneys are happy to discuss your bankruptcy options with you. To get started, please call 888-813-4737.