As a society, we value marriage. Culturally speaking, there is probably no more important institution than the institution of marriage. I am also happy to see this institution authorized for all members of society not just certain segments of society. But did you know that the one the single most important symbols of marriage, the wedding ring, could be seized to pay ones debts in Minnesota? Crazy but true.
If you were operating a business in Minnesota in 2004, and the business failed, you may end up with an enormous amount of debt. When you are unable to pay this debt, your creditors were free to seize your wedding ring and liquidate the ring to pay your bills. Now that is unfortunate in a society which prides itself on valuing the institution of marriage. How would this actually transpire? First - the good news. The good news is as of 2005, creditors are barred from seizing Minnesota’s resident’s wedding rings to satisfy debts.
The history of this statute and why it came to pass in 2005 with the verbiage it did
Prior to 2005, if you lived in Minnesota and if you had overwhelming debt, you could not pay, your creditors would sue you. If you defended the suit and lost or simply let the lawsuit proceed by default, your creditors would receive a judgment against you for the amount of the debt owed to them. What could they do then? Well, creditors in Minnesota have a variety of remedies available to them. Among them, the creditors can garnish wages and/or levy your bank accounts.
In addition creditors are free to pursue nonexempt assets. What are exempt and nonexempt assets? Good question. As a society, we recognize that debt is and always will be an issue in society. As Americans, we incur debt all the time. Debt is what keeps the American economy humming along. The issuance of consumer credit in the 20th and 21st century has been an enormous boon to our national economy.
While good for the overall economy, consumer debt can also cause individual pain. Maybe you lose your job, or you incur medical debt, or you simply get in over your head. Business debt has also overwhelmed millions of Americans who have pursued the American dream, had an entrepreneurial seizure, and the seizure was fatal- at least in terms of resulting in overwhelming business debt left unpaid.
If we let business and consumer creditors take everything you owned, you would be naked and afraid right? Seriously, if you owe creditors money, why not just let creditors take everything you have got worth any money at all? What is the first thing you would do, if a creditor did that to you? You would grab something to cover up your privates, and walk into the county social service office and ask the county for help- that is what you would do. Now imagine if every person being collected on in Hennepin County, Minnesota went to Hennepin County for financial help because they had lost all their assets to debt collectors? You see where this going, right?
It would not be long before Hennepin County would be calling the state of Minnesota to bail the county out. And after Hennepin County called the state of Minnesota, every other Minnesota county would follow suit. Soon, the state of Minnesota would run out of funds after bailing county after county out. Ok, enough, but you get the point? Letting creditors pursue all of a debtor’s assets would bankrupt our government!
So every state in the union, including Minnesota, has adopted a series of statutory exemptions exempting certain assets from collection. These exemptions in Minnesota can be found at Minnesota Statute Section 550.37. It outlines all kind of assets that are “exempt” from seizure in the state of Minnesota to pay creditors. What is exempt under Minnesota 550.37? Clothing, furnishings, vehicles, pensions, etc. Now, to be sure, there are limits to these exemptions. Most people would not own anything that is nonexempt and has much value to it. For example, technically, a snow blower, a lawnmower, or miscellaneous tools are not protected or exempt from creditors, but who in their right mind would spend money to get your lawn mower or snow blower?
So this is the back drop to the wedding ring exemption in Minnesota. Up until 2005, your wedding ring was nonexempt in Minnesota. If you owed a creditor money in Minnesota, the creditor could seize your wedding ring, liquidate it, and use the proceeds to pay down your debt.
I was admitted to the practice of law in Minnesota on May 10, 1996. Practicing law for me is about making a difference in people’s lives. It sincerely outraged me to file chapter 7 bankruptcy cases and have chapter 7 trustee’s hold their hands out asking for the debtor’s wedding ring so they could get an appraisal of the ring.
I have been to chapter 7 meetings where the trustee did exactly this. Can you imagine? The debtor, already embarrassed and afraid by the prospect of being in a bankruptcy to begin with, is now being asked for their wedding ring by a trustee in front of a room full of people. That is bullshit! Thankfully, the attorney sitting with the debtor had the foresight to deny the trustee’s request even as the trustee was shouting back at the trustee. Shame on the state of Minnesota for allowing this to happen.
Most people’s wedding rings have nominal value anyway
The value to most wedding rings is the emotional value not the monetary value and here we had the government preying on that emotional value to squeeze a few pennies out of the debtor to satisfy debts that were overwhelming. The whole spectacle was embarrassing and embarrassing for the trustee’s who had to administer such a barbaric omission in the law. So, in October, 2003, I sent a letter to Minnesota Senator Betsy Wergin Minnesota Representative Mark Olson. I asked them to amend Minnesota Statute Section 550.37 to include jewelry to match the federal exemption. I heard nothing back.
I sent another letter to both representatives in April 2004. Once again I heard nothing back from either representative. In the early fall of 2004 I seen an article in the Legislative Newsletter in which Representative Mark Olson writes about how he supports traditional marriages in Minnesota. Seeing another opportunity, I wrote Senator Betsy Wergin and Representative Mark Olson yet another letter urging them to propose legislation exempting Wedding rings under Minnesota law. The third time was the charm!
I heard from both Senator Wergin and Representative Olson. We were now on our way to correcting a gaping hole that existed in Minnesota law. My proposal was to correct this gaping hole, to solve this omission by mirroring the federal exemption on jewelry with a new Minnesota exemption for jewelry. At the time, Federal Bankruptcy Code Section 522(d)(4) provided for “jewelry held primarily for personal, family, or household use of the debtor or dependents of the debtor up to a value not to exceed $1,150.00.”
Instead, Representative Mark Olson sent me a proposed bill with language that was completely inconsistent with Federal Bankruptcy law. His proposed bill amended Minnesota Statute 550.37(4)© read, “ the debtor’s aggregate interest in wedding rings, not to exceed $1,225 in value, held primarily for the personal or family use of the debtor or a dependent of the debtor.”
I wrote Representative Mark Olson and protested that this bill would leave engagement rings exposed to seizure along with costume jewelry. I argued that the bill would result in a law that would allow creditors to seize and split apart a wedding ring and an engagement ring. This bill went part of the way but stopped short of what a common sense jewelry statute would read.
Not wanting to go that far, and in an effort to make the Minnesota jewelry exemption even more bizarre, Representative Olson and Senator Wergin changed the language again. This time the proposed bill was sent to the floor and passed. What we are left with is a wedding ring exemption that is awkward in it’s wording and awkward to enforce. It’s unfortunate that the Minnesota exemption could not mirror the federal jewelry exemption which is simple and straight forward.
If the fear was that we would allow debtors to keep expensive jewelry, a cap on the value would have solved that fear- as you can see the federal exemption has. Does anyone think that having $1150.00 in jewelry is a lot of jewelry to have when you are in debt?
Minnesota Statute Section 550.37(4)© now reads:
“The debtors aggregate interest, not exceeding $2,817.50 in value, in wedding rings or other religious or culturally recognized symbols of marriage exchanged between the debtor and spouse at the time of marriage and in the debtor’s possession.” How bizarre is this? You cannot make up how dumb this language is for a state’s attempt to formulate a jewelry exemption. But, we sometimes take what we can get from our legislators.
Representative Mark Olson is no longer a representative. After this bill was passed, Representative Olson’s own marriage was in the news. If you want to read about that you will have to do some google searches on your own time.
What is the fall out from all of this? We now have chapter 7 trustee’s asking when the debtor received their wedding ring. If the wedding ring was received prior to the “the time of the marriage,” the trustee’s position is the wedding ring is still an asset of the bankruptcy estate and can be liquidated to pay ones creditors. Good grief- really?
And true to my fear, the trustee’s still assert the engagement ring, which is now welded to the wedding ring, is an asset of the bankruptcy estate that needs to be turned over to the estate and liquidated to pay the debtor’s creditors. How sad.
Some day, I will muster the strength to fight this battle once again. Some day, we will enact a sensible Minnesota exemption on jewelry that does not create this spectacle at chapter 7 341 meetings. For now, we have to live with a statute that falls short of protecting the most basic of family jewelry.
No one is suggesting that a debtor in Minnesota should be able to keep a Rolex watch worth 10k or a ring worth 10k when the creditors get nothing, but would it kill the state of Minnesota to exempt modest family jewelry and skip the lecture by chapter 7 trustee’s searching for every nickel they can from a chapter 7 debtor with modest assets?
It’s now 2016. The Federal exemption for jewelry now provides for protection for jewelry valued at $1550.00- drop the mic..............
This is some modest stuff folks. Eventually, we will drop the goofy language contained in Minnesota Statute section 550.37(4)© for the more neutral and modest language in the federal exemption under Bankruptcy section 522(d)(4).
Until then, we live with a sub par statute that still places Minnesota residents at risk of losing the most modest of jewelry to their creditors. Hopefully, next time, it does not take multiple letters and so much time to enact a simple change.
Most creditors in Minnesota will not spend their time pursuing jewelry unless there is substantial value to the jewelry. Where this comes into play is when chapter 7 trustee aggressively pursues the debtor for the smallest of items, not in any real attempt to pay back the debtor’s creditors but more as way to harass the debtor and make them feel more anxious than they already feel. If you are looking for a bankruptcy attorney in Roseville, Minnesota, look for one that will not broker any kind of deal on keeping your wedding ring which is fastened to your engagement ring.
