A bankruptcy judge in Louisiana put the screws to the trustee to ameliorate the state’s stingy exemption for wedding rings.
A woman filed a chapter 7 petition three months after she married. Her husband had given her a 2.15 carat diamond engagement ring that he purchased for $9,800. At the time of purchase, the jeweler appraised the ring at $11,500.
Louisiana requires its citizens to use state exemptions. For wedding and engagement rings, the statute exempts any ring “provided the value of the ring does not exceed five thousand dollars.”
The debtor scheduled the ring as worth $9,800 and claimed a $5,000 exemption. In his Aug. 31 opinion, Bankruptcy Judge Jeffrey P. Norman of Shreveport concluded that state exemption was “all or nothing,” considering the plain language of the statute. In other words, if the ring were worth $5,000 or less, it would be entirely exempt. If the value were $5,001 or more, there would be no exemption at all.
Judge Norman only conditionally sustained the trustee’s objection to the claimed exemption, because there was a dispute about value. For exemption purposes, the debtor argued that the ring was worth only $4,800, the amount a pawnbroker was willing to pay.
With value disputed, Judge Norman gave the trustee one shot at proving value at public auction. If the hammer price were more than $5,000, the ring would lose its exemption. If the auction price were $5,000 or less, he would direct the trustee to return the ring to the debtor.