Saving Family Heirlooms in a Bankruptcy

Chapter 7 bankruptcy gives people with serious money problems the chance to discharge their non-exempt debts and make a new start without being hassled by creditors. This can be life-changing for many individuals and families. However, there is the possibility that certain assets owned by a Chapter 7 filer will be liquidated. This means that property will be sold, with the proceeds used as partial repayment for what the debtor owes. 

Most assets can be accurately assessed based on their market value. On the other hand, there are certain family heirlooms that mean much more to their owners than anyone else. A grandmother’s ring, china settings handed down for generations and other cherished items might be subject to liquidation even if the price they fetch does not come close to the value they hold for bankruptcy filers. 

If you’re thinking about bankruptcy, but are concerned about what might happen to your valuable heirlooms, a seasoned attorney can advise you on some important considerations, such as:

• Type of bankruptcy filing — Unlike Chapter 7, a Chapter 13 bankruptcy typically allows the debtor to keep all of their property while repaying creditors in a three-to-five-year plan. If heirlooms exceed available exemptions and your financial circumstances make a Chapter 13 repayment schedule feasible, that might be the path you choose.
• Chapter 7 exemptions — Georgia law allows you to guard certain assets against Chapter 7 liquidation. Treasured family items typically fall within the personal property exemption which can amount to a total of $5,000. However, no single item under this exemption can be worth more than $300. There is also a $500 jewelry exemption. Another option is the state’s wildcard exemption that gives filers the chance to protect property not otherwise covered. Generally, this exemption equals $1,200, but can be supplemented with up to $10,000 that is not utilized from the state’s homestead exemption. 
• Objective valuation — Jewelry from a beloved relative might be priceless to you, but it is important to determine what value it would have during a potential liquidation. In some cases, a used item might not bring much on the open market, so it could fit into an exemption, or the trustee could consider it not worth selling. 

An attorney with experience in this area can develop the optimal strategy for your circumstances and outline what life after bankruptcy will be like. Don’t act on your own to “gift” or stash heirlooms with friends or family before filing. Transfers for less than fair value, or concealment, can trigger avoidance actions, denial of discharge, or even fraud allegations.

Jeff Field & Associates offers personalized legal counsel to Georgia residents so they can protect what is most important during the bankruptcy process. Please call 404-381-1278 or contact us online to schedule a consultation. Our offices are in Douglasville, Gainesville, Bogart, Lawrenceville, Marietta and Decatur.