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The Jewelry Exemption
by Adam Mack, JD
As discussed in prior blog posts, when you file under either chapter 7 or chapter 13 in Kansas you can protect certain types of properties by claiming them as exempt. One of the exemptions available to Kansas bankruptcy filers is what is commonly referred to as the "Jewelry Exemption". Under state statute, a debtor may exempt "ornaments of the debtor's person, including jewelry, having a value of not to exceed $1,000." K.S.A. 60-2304(b). (And yes, the awkward wording is part of the Kansas Statute. I do proof read my blog articles before posting.)
Of course, a simple reading of the statute makes it clear that the exemption is broader than just jewelry, extending to personal ornaments generally. A common extension of this statute beyond jewelry would be firs and other fashion related items. The common reference to this law as the "Jewelry Exemption" is a result of jewelry being the most common use of the statute.
The $1000 limit applies to each debtor individually. So, if a husband and wife file bankruptcy jointly, then each one of them have a $1000 exemption, $2000 of total possible exemptions combined. However, the exemption can only be used for each individual person's respective property. In other words, if a wife has a wedding ring worth $1500 and the husband has a watch worth $200, then, even though the total amount of property for both husband and wife is less the the combined $2000 limit, the trustee will almost assuredly object to the claim of exemption because the $1500 ring exceeds the wife's individual $1000 limit.
Also, as a practical matter, if you are claiming jewelry (or other personal ornaments) as exempt and the value of the items are close to or right at $1000, then the property will likely draw some attention by the trustee. This will often result in the trustee requiring a valuation to be completed by a third party to determine the actual value of the item.
As such, accurately identifying the value or your property prior to filing is crucial. In regard to determining the value of your ring, or any other asset for that matter, you should use the value that the particular item would have if it was being sold by a retailer in the item's current condition. This valuation standard would likely be required because of a United States Supreme Court decision called Associates Commercial Corp v. Rash where the Supreme Court required the valuation in that particular case to be based on "the price a willing buyer in the debtor's trade, business, or situation would pay to obtain like property from a willing seller." Associates Commercial Corp. v. Rash, 520 US 953, 960 (1997).
All that said, if you are overwhelmed by debt and need to protect yourself or your family, and if you have a wedding ring or other sentimental non-exempt asset that exceeds the value of the allowed Kansas bankruptcy jewelry exemption, do not panic. There may be some risk involved in filing, but there are often solutions that can be worked out between you and the trustee who is assigned to administer the bankruptcy estate in your case. Before filing, you should speak to an experienced bankruptcy lawyer to determine what kind of risks may accompany a bankruptcy filing.