Posted on: 17 December 2018
A bankruptcy filing can create freedom from debt but that debt relief might come at a price. Not all filers end up losing property through a chapter 7 filing, but you must understand what is at stake and the full consequences of a filing before you make that move. Read on to find out more about losing property and about valuing your jewelry for bankruptcy purposes.
The Liquidation Aspect of Bankruptcy
Most consumers that file for bankruptcy are not wealthy enough to be concerned about losing property but it pays to know about that potential. Property taken through a bankruptcy is sold and the proceeds used to pay back some of your creditors. Not all of your property is at risk—some of it is protected by exemptions. Each state allows filers to keep a dollar amount in value of their homes, cars, bank accounts, and other property. If you have a lot of jewelry, it could be at risk if the value exceeds your state's personal exemption.
Placing a Value on Your Property
Part of your bankruptcy filing includes a listing of your property with an estimated value. You can use various methods for determining the value of each property category, such as using NADA for your cars and a real estate appraisal for your home. Keeping in mind that your property is used, you will need to value items at so-called "yard sale" or used prices.
Placing a Value on Your Jewelry
Your jewelry may have been handed down to you from your grandmother or given as gifts to you, but it all must be listed on the bankruptcy forms for the bankruptcy court. Used jewelry has a value, but in most cases, the dollar value pales in comparison to the sentimental value it may hold for you. Items containing precious stones and metals may have held or even increased in value since they were originally purchased. If you have precious jewelry pieces, you must have them valued by a jeweler.
There is more than one way to determine the financial value of an item. There is market value, estate value, replacement value, and liquidation value. The latter, liquidation value, is the pertinent type of value that is needed to fill out your bankruptcy form. A jeweler that buys estate or used jewelry will provide you with a price that is the amount they would be willing to pay you for that piece of jewelry if you were ready to sell it immediately. That is the value you need to use.
You can do a lot to protect your property from seizure as long as you are prepared ahead of time. If your state exemptions are not enough to prevent your jewelry from seizure, you may have an option to pay the trustee the appraised value of the item to avoid its loss. Speak to bankruptcy attorneys like those at Phoenix Law about your concerns to learn more.Share