Is a Wedding Ring Exempt from Liquidation During Bankruptcy?

Certain items of personal property hold special value to their owners. Under Chapter 7 bankruptcy, a person may be required to sell off or liquidate items of property in order to secure sufficient funds to settle debts with creditors. The process of liquidation can force a person to part with items of property that carry special memories or sentiments with them.

However, if a particular piece of property is exempt, then a person subject to Chapter 7 bankruptcy may be able to protect it from liquidation. Both New York law and federal law offer different forms of exemptions that property owners may use to protect items of real and personal property. Generally, those filing for Chapter 7 bankruptcy get to decide whether they will follow federal or state guidelines for exemptions.

In some cases a property owner may be able to classify a wedding ring as an heirloom and protect it under an heirloom exemption. Personal property exemptions also exist at the state and federal levels that may include jewelry like wedding rings. Additionally, in some cases a person may be able to protect a wedding right from liquidation by protecting it under a wildcard exemption.

The best way to answer this very specific question is to discuss it with a bankruptcy professional. The value of the ring may factor into whether it may qualify for an exemption and other issues may be present that change how a bankruptcy court will assess the ability of a wedding ring to be exempt. This blog post offers only a general overview of this question may be answered but readers should not rely on it as specific advice.