My wife and I made the decision to open a residential cleaning business. We needed enough money to get the equipment, do a bit of advertising and get the licensing and insurance to protect ourselves and our customers. For about two years, things went very well, but then, things took a terrible spin for the worst after we hired a few employees to help us with the workload. Since then, we have gone bankrupt and have gone back to working full time jobs. If you are struggling with your business and considering bankruptcy, this blog can give you some answers to the many questions that you have.
When money troubles happen, the last thing on your mind is the potential to lose property. Chapter 7 bankruptcy filings can also include the potential to lose property through its liquidation process. Fortunately, most people don't lose property and just end up getting the financial relief they really need. Read on to find out how a chapter 7 bankruptcy treats your personal property, like jewelry, so that you can go into the process with confidence.
How Your Jewelry is Protected
While you might be somewhat assured to know that few people lose property when they declare chapter 7 bankruptcy, it might be helpful to know why that is. The purpose of bankruptcy is to provide consumers with a way to start over and to make better financial decisions after learning from past mistakes. The bankruptcy code does give bankruptcy trustees the power to seize property and give your creditors the proceeds, but there is never an intention to leave filers destitute.
Exemptions
Your jewelry, and all of your other property, is protected by exemptions. Each state has its own exemptions and they can vary widely. The main thing to keep in mind is that the bankruptcy trustee is not going to bother seizing your jewelry unless you have a great deal of it and it's worth a lot of money. The resale value of used jewelry is nowhere near what your pieces were worth when purchased. That means that you can likely keep your jewelry. For example, chapter 7 bankruptcy filers in California can take advantage of an $8,725 exemption on jewelry and family heirlooms. That means your jewelry is safe up to that amount.
How Your Jewelry is Valued
If you are like most, your jewelry may not be expensive but it may mean something to you. Unfortunately, you must list your jewelry on the bankruptcy asset inventory and give it a value, regardless of what it's worth to you personally. To be clear, the bankruptcy trustee is not interested in anything but precious jewelry. That means gold, platinum, silver, and precious stones. To get a better idea of what your fine jewelry is worth for bankruptcy purposes, you must have them appraised.
What is Meant by Value
There is more than one way to assign value. When it comes to jewelry, you can have estate value, market value, replacement value, and liquidation value. It is the last category, liquidation value, that is needed for bankruptcy purposes. Often, jewelry stores that buy used pieces can provide you with the numbers you need for your paperwork.
Speak to your bankruptcy lawyer if you have jewelry that is higher in liquidation value than your state's exemption. There are other options to avoid having to forfeit it.
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