Bankruptcy is Romantic: Maine Bankruptcy Court Holds That a Debtor’s Interest in Her Engagement Ring is Exempt

Recently, the Bankruptcy Court for the District of Maine held that a debtor’s interest in an engagement ring is exempt under Maine law. In re Cynthia A. Chaney, Case No. 15-20725. In that case, the debtor claimed the full value of her wedding and engagement rings, valued at $5,200, as exempt under Maine law. The Chapter 7 Trustee in the case objected, arguing that Maine law allows an exemption in jewelry up to a maximum value of $750. 

In Maine, a debtor may claim an exemption in the debtor’s “aggregate interest, not to exceed $750 in value, in jewelry primarily for personal family, or household use of the debtor or a dependent of the debtor and the debtor’s interest in a wedding ring and an engagement ring.” 14 M.R.S. §4422(4). The Trustee argued, based on legislative history and his reading of the surrounding provisions, that this language limited any exemption in any jewelry to $750 total, including wedding and engagement rings. The debtor argued that the statute created two categories of jewelry: personal jewelry with an aggregate value of $750, and a wedding ring and an engagement ring of unlimited value. 

The Bankruptcy Court found the language of the statute to be unambiguous: 

It allows debtors to protect two separate types of jewelry: (1) personal jewelry and (2) two rings connected to the institution of marriage. . . . The first category has a limit: debtors can exempt up to $750 of jewelry held primarily for personal family or household use. The second group has no limit: debtors are permitted to protect their full interest in a wedding ring and an engagement ring.

From the opinion, it is clear that in Maine a debtor can claim an exemption in two marital rings of unlimited value. Other New England states have different exemption limits for jewelry. For example, Massachusetts allows the debtor to elect either the Massachusetts state exemptions or the federal exemptions. Only the federal exemption has an exemption for jewelry—up to $1,600 in value (value adjusted on April 1, 2016). In New Hampshire, a debtor may exempt jewelry up to a value of $500. NH RSA 511:2. In New Hampshire, a debtor can also apply his or her “wildcard” exemption to protect jewelry with value above the $500 exemption.