Are you a collector of rare or vintage clothing? If you are but are struggling with your finances, you may be worried that you will have to sell your clothing during a bankruptcy. The truth is that whether or not you need to do so will depend on the kind of bankruptcy you choose, such as a Chapter 7 or 13 bankruptcy, and the value of the clothes you own.
Usually, clothing is exempt from bankruptcy because it has no significant value. Realistically, a few shirts and pairs of pants may not have much resale value, so the court generally does allow those to be exempted.
However, items with a high value may need to be sold, especially if you have them in excess.
What is clothing or an item with a high value?
A high-value item is anything that could sell for substantial money. The court may also include goods that are luxury items in that category.
For example, if you have a collection of bags from luxury brands that are valued between $200 and $500 each upon resale, the court may determine that you should sell those to repay some of your debts. While it might be reasonable to keep one or two of these items, luxury items are generally able to be liquidated.
Other items that may fetch a high price, like luxury shoes, luxury coats, high-end sunglasses and other goods may also be sold during bankruptcy if they could bring a reasonable price when sold.
What can you do if you want to protect your luxury items?
It may be possible to protect some of the luxury items you own during bankruptcy. For example, there is usually a wildcard exemption that you can use that will give you a particular value of goods that you can protect. If you have a $1,000 wildcard, for example, you could protect $1,000 of any items in your possession against liquidation.
If you are struggling with debt, bankruptcy could be a good option. Many people don’t end up liquidating any of their personal assets, so consider discussing your options before determining what you will or won’t need to sell off.