Many New Jersey residents engaged to be married plan to hit the financial "reset button" before the wedding, so as to have a fresh start for their lives together. Usually this entails a bride or a groom with unmanageable debt that he or she does not want to bring to the marriage.
However, if the bankruptcy is not handled properly, that engagement ring on the girl's finger could end up in the hands of the bankruptcy trustee. Whether that happens or not can depend on certain factors.
Was the Ring a Gift or a Promise?
Under New Jersey law, if an engagement ring is given to a woman, it is either seen as a gift (if given at Christmas, a birthday, or other gift-giving occasions upon which gifts are usually exchanged) or as a sign of a promise to take a certain act in the future (i.e. marry the recipient).
If it is the former, the transfer is permanent, and is now the asset of the future bride. If it is the latter, it is still the property of the future groom until the marriage takes place. In other words, if the engagement is canceled, the bride must give back the ring.
Handling the Ring Properly as an Asset in a Bankruptcy
Once it is determined whose asset the ring is, then the appropriate step has to be taken to protect it, depending on who is filing. If the owner is filing, then the ring has to be protected by the jewelry (and possible "wild card") exemption to keep the trustee from taking it. If the owner is not filing, then an exemption does not come in to play, but it must be described properly in the petition.
If it is the future bride, then she must list it as property she is holding for another (the future groom). If it is the future groom, then he must list it as a gift to another (the future bride). Gifts to others of significant value must be disclosed in a bankruptcy petition, but the value of said gift can be offset by any gifts received in return. Thus if the future bride gave the future groom any gifts in return prior to the marriage, that value has to be carefully noted, and the net difference (if there is one) exempted.
So What Do I Do?
This is not a simple matter. If you are living in southern New Jersey, engaged to be married, and contemplating the filing of a bankruptcy before the wedding, please feel free to call my office at 856-432-4113 or contact me through this site to schedule an appointment in my Woodbury office to discuss your options. Don't take the risk of putting a damper on a happy event!
Just looking for more information on bankruptcy? Then download my book, Top Questions People Ask About Filing Bankruptcy in New Jersey.