Is Your Wedding Ring Protected When Filing For Bankruptcy?

For many people, the most valuable asset they have, after a house and a car, is a wedding or engagement ring (often together in a wedding set). When filing bankruptcy, a person will want to know that his or her wedding ring is protected. In a Chapter 7 bankruptcy, a trustee can sell any property that has enough value to bring significant money into the bankruptcy estate. To protect a basic minimum level of property, state law provides that certain assets are “exempt” from the reach of the trustee. For example, the first $15,000 of equity in a home is exempt ($30,000 for married couples), and the first $2,400 of value in a car is exempt from the trustee.

For other kinds of personal property, there is a $4,000 exemption that is called the “wild card” exemption. This protects furniture, household goods, and electronics. There is also an exemption that covers all “necessary wearing apparel,” and it doesn’t have a dollar limit–all necessary wearing apparel is exempt.

So what constitutes necessary wearing apparel? What about a wedding or engagement ring? Is jewelry considered a part of “necessary wearing apparel,” or is it part of “all other personal property”? If a ring is considered necessary wearing apparel, then it is completely exempt from the reach of the trustee, no matter how valuable. If it does not qualify as necessary wearing apparel, then it is subject to the “wild card” exemption, which totals $4,000, and includes all furniture, appliances, TV, computers–everything in the house. If the other household goods are worth close to the $4,000 limit, then that leaves the wedding ring unprotected, and the trustee can sell the ring, which in some cases may be the most valuable piece of personal property a debtor might own.

The very good news is that a recent court decision confirmed that a wedding ring is part of “necessary wearing apparel.” In a case in the Bankruptcy Court for the Northern District of Illinois, No. 17 B 18090, the court stated that “the wearing of a wedding ring has become common custom, even a necessary sign of being married; this custom is intended as an outward display to the world that the wearer has entered into the tradition of marriage or a religious sacrament when viewed as such.” Such an important symbol, the court stated, qualifies a wedding ring as “necessary wearing apparel” under the Illinois exemption. People who file bankruptcy can rest assured that their wedding and engagement rings should be out of the reach of the bankruptcy trustee.

I am proud that our law firm brought the case to the Bankruptcy Court that established this precedent!   I am always looking for opportunities to extend new benefits and protections for my clients.  Please do not hesitate to call to discuss any similar concerns, as we may be able to help you!