In Georgia, it is very rare to have the Chapter 7 Trustee seize your jewelry to liquidate for the benefit of unsecured creditors. The bankruptcy code provides that debtors can use Georgia state law exemptions to keep certain property from the grasp of the Trustee and creditors. Under Georgia law, debtors may exempt up to $600 in jewelry, plus another $5,000 if no homestead exemption is used (such as if the debtor is surrendering his or her residence in a Chapter 7). If the case is filed by a married couple, this exemption amount doubles to $11,200 worth of jewelry that a debtor can exempt from the reach of creditors and the Trustee.
The good news is that the Trustee is not likely to be interested in your 1.5 carat diamond engagement ring for one reason: liquidation value. After you take the exemptions and costs of sale, the ring is significantly devalued. Furthermore, the liquidation value of jewelry is much lower than most people realize. While your gemologist may have appraised your shiny new engagement ring at $10,000, a local pawn shop or jewelry store may only offer you $1000 for it. This is the value that the Trustee will be basing his or her decision on. As a result, a bride’s engagement ring or wedding ring is seldom the target of a Trustee’s liquidation.