Jewelry and Art in California Bankruptcy

Section 704.040 of the California Code of Civil Procedure exempts jewelry, heirlooms, and works of art to the extent their aggregate equity does not exceed $7,175. The exemption can be used to exempt several pieces of jewelry, heirlooms, or works of art, not just a single item. The aim of the section is to protect personal property that itself may be quite valuable but which also carries immense sentimental value. For example, wedding rings can be exempted under this section. In essence, a wedding ring may carry a significant monetary value that could benefit creditors in bankruptcy. However, one policy underlying bankruptcy is to protect human dignity throughout the bankruptcy process. Accordingly, the policy of protecting human dignity would not be advanced by forcing married debtors to part with their wedding rings in order to achieve a fresh start. Therefore, the jewelry, heirlooms, and works of art exemption in bankruptcy protect these valuable, yet sentimental, items from liquidation, and thereby protects human dignity throughout the bankruptcy process.

Works of Art

A work of art is defined by its underlying utilitarian purpose. In essence, a work of art is something that is created primarily for art’s sake as opposed to a utilitarian function. Absent this utilitarian inquiry debtors might seek to circumvent liquidation by labeling non-exempt items as works of art. To illustrate a work of art assume that a debtor in Santa Rosa purchases a $1,000 bathroom scale. The bathroom scale is ultra-modern, constructed from rare materials, and is praised by designers worldwide. The bathroom scale if of extraordinary value and therefore not qualified for the household furnishings and personal effects exemption. Since the bathroom scale cannot be exempted as a personal effect, the debtor can try to save the bathroom scale from liquidation by calling it a work of art since it is recognized worldwide by designers for its aesthetic appeal. In this case, the debtor could not exempt the bathroom scale as a work of art in Santa Rosa bankruptcy. While the bathroom scale may be recognized for its aesthetics, its primary purpose is to serve the utilitarian function of weighing people.