More emotional suffering comes from wedding ring issues in Chapter 7 Bankruptcy cases in Arizona than many other issues.
Here's why: the exemption listed as of the date of this post on the faqs at the Bankruptcy Court website for the District of Arizona Bankruptcy Court shows fair market value of up to $1,000 for a wedding ring exemption.
Okay, why should that be a problem for a debtor couple in a Chapter 7 case?
Because five years ago, everybody in the United States believed, with some justification, that they were rich and that their retirement was safely assured.
That was before the depression hit.
Now Arizonans who were worth $5,000,000 are worth a NEGATIVE $5,000,000.
That means they'll probably have to file a Chapter 7 as part of their newly postponed retirement planning.
And that means that they get to sit with their beautiful wives, for whom they bought a $25,000 wedding ring five years ago ("We got a cheapie when we were married, and I wanted to make it up to her when we were rich. Before the market crashed.")
So what can you do with that wedding ring? Well, it's probably a lot like what you can do with the Rolex. Except that the resale opportunities for the Rolex are better.
Diamond rings are beautiful, but they look exactly like cubic zirconia to the uninitiated without a jeweler's loupe. Cubic zirconia looks so much like a diamond that it's indistinguishable (Its refractive index is high at 2.15–2.18 (B-G interval, compared to 2.42 for diamonds). Its dispersion is very high at 0.058–0.066, exceeding that of diamond (0.044); that's from the Wikipedia article about CZ.
In fact, one way that jewelers know that a gem is a cz instead of a diamond is excessive perfection (no inclusions or flaws and perfect color).
So selling a diamond ring is harder than selling a Rolex. The range of values is wider, because all jewelry is marked up by obscene amounts for retail sale (apparently, jewelry is like heroin, and goes up in price by a factor of ten every time it moves forward through a new pair of hands).
Therefore the choices for dealing with a very expensive diamond ring are somewhat limited.
If the fair market value is only $2,000, perhaps you could "stack" both his and her wedding ring exemptions on her ring. It ought to work, unless it doesn't.
And even if the ring cost five or ten thousand dollars, its fair market value in today's market is something that's hard to figure. A pawn shop will give you one value, and a high end jewelry shop that does consignment sales will give you another.
As always, if you sell an asset, like a diamond ring, to an insider as defined by the bankruptcy code, get an opinion of value from a good source, and if possible multiple good sources.
If you want to sell the diamond ring that cost $25,000 five years ago to Grandma for $5,000, you'd better have a magnificient appraisal from a magnificent appraiser, or three, and expect the trustee to take the ring to an appraiser he or she trusts, as well.
There may well be an objection to the exemption if you're listing a ring that sold for $25,000 five years ago as being worth $2,000 now in your bankruptcy (in fact, plan on it).
That leave only a few alternatives for the ring. If you can sell it to a friend or relative, AND you have an appraisal or two, AND they're paying something close to the original acquisition price to avoid the appearance of a fraudulent transfer, AND you have open "ice-cube trays" of exemptions like the food, fuel and provisions and the homestead exemption where you can use the proceeds of the sale, AND if there isn't a "pigs get fat and hogs get slaughtered" problem in the case, AND you made darn sure you listed the sale someplace in your schedules (less important that you list it in the right place than that you list it), maybe you'll be okay.
Or if you have a non-dischargeable tax debt listed in your schedules, you can always keep the ring, list the double exemptions on the ring, let the trustee sell the ring for whatever he can get, and take the $2,000 as beenie-weenie money. If you have a particularly compassionate trustee, you can ask for an early distribution to the IRS as part of the deal, so that you haven't lost the value of the ring (because you were going to have to pay that IRS debt anyway).
Look at it this way: if it was easy, everybody would do it. Oh, wait! Everybody is doing it!
Here's another alternative: if the loss of the diamond ring would destroy the marriage, than perhaps a Chapter 13 gets filed instead of a Chapter 7, and the non-exempt value of the ring gets paid to creditors over up to five years. But that puts off real retirement planning for another five years, so maybe that's not such a great alternative.
Here's the worst alternative: failing to list the ring at all. See bankruptcy fraud, bankruptcy crime and terminal stupidity. If your inherent honesty isn't enough to make sure you list an asset like the ring, consider this: bankruptcy trustees have access to your credit card receipts, your insurance riders, and your check registers. And they actually study them. DO NOT fail to list a substantial asset of any sort, because it's simply not worth it.
And if you tell any experienced bankruptcy lawyer in Arizona that you intentionally decided not to list the ring as an asset in your Chapter 7 Bankruptcy, whether he's Martindale AV rated, Board Certified as a Specialist in Bankruptcy Law by the Arizona Board of Legal Specialization, AVVO 10 rated, or just not dumb as a stump, he'll politely let you know that he is the wrong lawyer for the job, and show you the door.
P.S. The vast, vast majority of debtors are more honest than George Washington, and would no more suggest not listing an asset than the man in the moon. Most debtors in bankruptcy cases in Arizona are simply folks who were pushing a big rock up a steep hill and then had a heart attack, got sick, were served with divorce papers, were laid off by their employer, or had some other external event that forced their hand and caused the bankruptcy filing.
Like a depression.
Here's why: the exemption listed as of the date of this post on the faqs at the Bankruptcy Court website for the District of Arizona Bankruptcy Court shows fair market value of up to $1,000 for a wedding ring exemption.
Okay, why should that be a problem for a debtor couple in a Chapter 7 case?
Because five years ago, everybody in the United States believed, with some justification, that they were rich and that their retirement was safely assured.
That was before the depression hit.
Now Arizonans who were worth $5,000,000 are worth a NEGATIVE $5,000,000.
That means they'll probably have to file a Chapter 7 as part of their newly postponed retirement planning.
And that means that they get to sit with their beautiful wives, for whom they bought a $25,000 wedding ring five years ago ("We got a cheapie when we were married, and I wanted to make it up to her when we were rich. Before the market crashed.")
So what can you do with that wedding ring? Well, it's probably a lot like what you can do with the Rolex. Except that the resale opportunities for the Rolex are better.
Diamond rings are beautiful, but they look exactly like cubic zirconia to the uninitiated without a jeweler's loupe. Cubic zirconia looks so much like a diamond that it's indistinguishable (Its refractive index is high at 2.15–2.18 (B-G interval, compared to 2.42 for diamonds). Its dispersion is very high at 0.058–0.066, exceeding that of diamond (0.044); that's from the Wikipedia article about CZ.
In fact, one way that jewelers know that a gem is a cz instead of a diamond is excessive perfection (no inclusions or flaws and perfect color).
So selling a diamond ring is harder than selling a Rolex. The range of values is wider, because all jewelry is marked up by obscene amounts for retail sale (apparently, jewelry is like heroin, and goes up in price by a factor of ten every time it moves forward through a new pair of hands).
Therefore the choices for dealing with a very expensive diamond ring are somewhat limited.
If the fair market value is only $2,000, perhaps you could "stack" both his and her wedding ring exemptions on her ring. It ought to work, unless it doesn't.
And even if the ring cost five or ten thousand dollars, its fair market value in today's market is something that's hard to figure. A pawn shop will give you one value, and a high end jewelry shop that does consignment sales will give you another.
As always, if you sell an asset, like a diamond ring, to an insider as defined by the bankruptcy code, get an opinion of value from a good source, and if possible multiple good sources.
If you want to sell the diamond ring that cost $25,000 five years ago to Grandma for $5,000, you'd better have a magnificient appraisal from a magnificent appraiser, or three, and expect the trustee to take the ring to an appraiser he or she trusts, as well.
There may well be an objection to the exemption if you're listing a ring that sold for $25,000 five years ago as being worth $2,000 now in your bankruptcy (in fact, plan on it).
That leave only a few alternatives for the ring. If you can sell it to a friend or relative, AND you have an appraisal or two, AND they're paying something close to the original acquisition price to avoid the appearance of a fraudulent transfer, AND you have open "ice-cube trays" of exemptions like the food, fuel and provisions and the homestead exemption where you can use the proceeds of the sale, AND if there isn't a "pigs get fat and hogs get slaughtered" problem in the case, AND you made darn sure you listed the sale someplace in your schedules (less important that you list it in the right place than that you list it), maybe you'll be okay.
Or if you have a non-dischargeable tax debt listed in your schedules, you can always keep the ring, list the double exemptions on the ring, let the trustee sell the ring for whatever he can get, and take the $2,000 as beenie-weenie money. If you have a particularly compassionate trustee, you can ask for an early distribution to the IRS as part of the deal, so that you haven't lost the value of the ring (because you were going to have to pay that IRS debt anyway).
Look at it this way: if it was easy, everybody would do it. Oh, wait! Everybody is doing it!
Here's another alternative: if the loss of the diamond ring would destroy the marriage, than perhaps a Chapter 13 gets filed instead of a Chapter 7, and the non-exempt value of the ring gets paid to creditors over up to five years. But that puts off real retirement planning for another five years, so maybe that's not such a great alternative.
Here's the worst alternative: failing to list the ring at all. See bankruptcy fraud, bankruptcy crime and terminal stupidity. If your inherent honesty isn't enough to make sure you list an asset like the ring, consider this: bankruptcy trustees have access to your credit card receipts, your insurance riders, and your check registers. And they actually study them. DO NOT fail to list a substantial asset of any sort, because it's simply not worth it.
And if you tell any experienced bankruptcy lawyer in Arizona that you intentionally decided not to list the ring as an asset in your Chapter 7 Bankruptcy, whether he's Martindale AV rated, Board Certified as a Specialist in Bankruptcy Law by the Arizona Board of Legal Specialization, AVVO 10 rated, or just not dumb as a stump, he'll politely let you know that he is the wrong lawyer for the job, and show you the door.
P.S. The vast, vast majority of debtors are more honest than George Washington, and would no more suggest not listing an asset than the man in the moon. Most debtors in bankruptcy cases in Arizona are simply folks who were pushing a big rock up a steep hill and then had a heart attack, got sick, were served with divorce papers, were laid off by their employer, or had some other external event that forced their hand and caused the bankruptcy filing.
Like a depression.
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