In the survey conducted by freecreditscore.com, 75% of women said that a man’s credit score factors into their dating decision.
So ladies, you find your guy with a rip roaring credit score and you fall in love.
Things could not be better and ultimately, he proposes marriage. His blingy credit score translates well into a valuable engagement ring.
Love prevails, but unfortunately, you run into financial hardship. Here is where the female bankruptcy filers need to take heed.
Wearing Your Most Valuable Asset.
For some women, the engagement ring on their finger is the most valuable thing they own.
To you, it is a symbol of love, commitment and an everlasting bond. To the bankruptcy trustee, it is just an asset that becomes part of the bankruptcy estate.
Just like any other asset, once you file chapter 7 bankruptcy, the ring no longer belongs to you. It is a part of the estate and can be confiscated and sold for the benefit of your creditors.
Remembering that most people do not think of an engagement ring as an asset, it is fair that many people try to avoid this issue by not listing it in their petition.
This is very bad!
All assets must be listed on your bankruptcy petition and valued appropriately in the documents.
To not do so is a serious offense and the risk does not balance out the reward.
Protecting Your Bling
Now, while all property becomes part of your bankruptcy estate when you file, you are entitled to protect certain assets up to a certain value using Federal or State exemptions.
Your engagement ring can be protected using the available jewelry exemption. Unfortunately, this exemption is pretty paltry.
In New York, you are allowed to protect up to $1,000.00 on any one piece of jewelry. The Federal allowance is not much better at $1,550.00, although the Federal Wildcard Exemption does allow for an additional $12,725.00 to be spread out across your personal property.
For most, this is sufficient to protect the ring.
For those with other valuable assets, including a home, it may not be enough.
“I Could Care Less About That Ring”
I had a client a few years back who fell into this exact situation.
She had recently gone through a divorce and she was able to hold on to her engagement ring which was worth approximately $11,000.00 as per an appraisal.
In addition, she had cash assets also totalling approximately $11,000.00.
She had a decision to make prior to filing and for her, it was simple. She could have used her allowable exemption to protect either her cash or her ring.
After going through a difficult divorce where things ended badly, she was almost relieved to surrender the ring to the trustee. She felt it was a small price to pay for getting out of debt.
It provided her with a fresh start financially and emotionally.
This situation is not typical and most women would feel terrible about losing their ring through the bankruptcy process. Another example of how filing bankruptcy without an attorney could be extremely risky.
So again, at the intersection of love and bankruptcy, keep your options open. If he drops down on his knee and pops the question, take a snapshot of your financial status before saying “I do.”
Image courtesy of Telachhe (Flickr).