Can I Keep My Luxury Items If I File for Bankruptcy?

Filing for bankruptcy is never an easy decision. You may feel overwhelmed, anxious, and unsure about what comes next. One common worry many people have is whether they’ll lose everything, including what they worked hard to buy. You’re not alone if you’re wondering whether you can keep your luxury items during bankruptcy. Let’s break down how this works and what you can expect.

What Counts as a Luxury Item?

Luxury items are things you don’t need to live but choose to buy because they add comfort, style, or fun to your life. Think designer handbags, expensive jewelry, high-end electronics, collectibles, or a second car or vacation home. These aren’t everyday necessities like clothes, basic furniture, or your primary vehicle.

The court considers luxury items differently from essential belongings.

Why?

Because the primary goal of bankruptcy is to help you get back on your feet, not to protect non-essential or extravagant property.

Chapter 7 vs. Chapter 13: It Makes a Difference

The type of bankruptcy you file significantly affects what happens to your luxury items.

Chapter 7 is often called “liquidation” bankruptcy. In this case, a court-appointed trustee may sell your non-exempt property to pay off creditors. Exempt property includes things you can keep up to a specific value, like basic household goods or your primary car. Luxury items are almost always considered non-exempt, which means they can be sold.

Chapter 13 is more of a repayment plan. You keep your property but agree to pay back some or all of your debts over three to five years. Luxury items don’t get sold right away, but they can increase how much you must pay. The value of your non-exempt property helps decide how much your creditors should receive during your plan.

Can You Keep Luxury Items in Chapter 7?

Sometimes, yes—but it depends on the item and its value.

Each state has a list of exemptions that protect specific property in a Chapter 7 case. If your luxury item fits within those exemptions, you may get to keep it. For example, a car might be considered exempt if it’s under a specific value. But if your vehicle is a high-end sports car, the trustee may sell it to pay creditors and give you back the exempt amount.

You own a $5,000 designer handbag collection; your state only exempts $1,000 in personal property. The trustee might allow you to keep one bag but sell the rest. You usually don’t have to worry about losing every personal belonging, but you may need to part with higher-value items.

What About Chapter 13?

In Chapter 13, the value of your luxury items can impact your monthly payment. If you have more valuable items, your payment plan might be higher. But you still get to keep those items if you stick to the repayment schedule.

Some people file Chapter 13 specifically to protect assets they would lose in Chapter 7. This approach works best when you have steady income and want to avoid liquidation.

Can I Hide Luxury Items or Give Them Away?

No—and please don’t try.

The court takes bankruptcy fraud very seriously. Giving away or hiding luxury items before filing could backfire. The trustee may undo those transfers, and you could face fines or worse. It’s always best to be honest and upfront about what you own. A bankruptcy attorney can help you decide what to list, what’s protected, and your best options.

Planning Helps

If you’re thinking about filing for bankruptcy and you own luxury items, don’t panic. You still have options. A lawyer can help you look at your financial picture and choose the right path forward. They can also help you understand what’s protected and what you might need to give up.

Sometimes, you can even buy back non-exempt property from the trustee, especially if it has sentimental value. Other times, you can sell an item yourself before filing and use the money for essentials, like rent or groceries, which is allowed. But always talk to a lawyer before making any moves.

Let’s Talk About Your Situation

Every case is different. Whether you can keep your luxury items depends on what you own, what they are worth, and how your state’s exemptions work. If you’re considering bankruptcy and want to make wise choices about your assets, we’re here to help.

Contact the Law Offices of Robert M. Geller to schedule a consultation. We’ll walk you through your options, answer your questions, and help you confidently move forward—no pressure, support.