In Re Sumerell

MEMORANDUM

This case is presently before the court upon the objection filed by Wachovia Bank of South Carolina (‘Wachovia”) to the debtors’ claim of exemptions in certain personal property owned by them. Wachovia alleges that the exemptions should be denied because the debtors have substantially undervalued their property and have acted in bad faith by their prepetition transfers of certain assets and their failure to list these assets in their schedules. For the reasons set forth below, the court will sustain the objection with respect to the majority of the exemptions claimed by the debtor, the court having con- *822 eluded that the debtors have incorrectly valued their household property at liquidation value.

I.

This joint chapter 7 case was filed by the debtors, husband and wife, on May 18, 1995. Along with the filing of the petition, the debtors filed their required schedules and statements, including Schedule B, the List of Personal Property and Schedule C, the List of Property Claimed As Exempt. Schedule B indicated that as of May 18, 1995, the debtors had an interest in the following personal property:

CURRENT MARKET VALUE OF DEBTORS’ INTEREST TYPE OF PROPERTY

Cash on hand © © ©

Cheeking accounts ^ ©

$ 2,135.00 Various household goods and furnishings [this listing was itemized]

$ 200.00 Clothing

$ 2,165.00 Jewelry [with separate appraisal list]

$ 1,700.00 Mink stole, fox and full length mink, eight place settings of silverware

$ 50.00 Three firearms

$ 50.00 Office equipment (desk, three chairs and table)

$15,000.00 Air conditioning unit (Fully secured)

$ 435.00 IBM AT personal computer, typewriter, P 51 computer with printer, non-running riding mower, washer and dryer, VCR, wicker sofa, three chairs, coffee table and aluminum patio furniture

$21,841.00 TOTAL

All of the items of personal property set forth on Schedule B were restated and claimed as exempt on Schedule C pursuant to Tenn.Code Ann. § 26-2-102, 1 the $4,000.00 personal property exemption for individuals, Tenn.Code Ann. § 26-2-103(a)(l), 2 the exemption for reasonable and necessary wearing apparel, or Tenn.Code ANN. § 26-2-111(4), 3 the $750.00 exemption for tools of the trade. The debtors subsequently amended both Schedules B and C to add an additional checking account with a balance of $381.94, golf clubs valued at $125.00 and two dolls valued together at $35.00. 4

*823 Wachovia timely 5 objected to the claimed exemptions, as amended, asserting that the personal property values as set forth in the schedules by the debtors were not accurate and that the exemptions should be denied. Wachovia further requested that in the event the court sustained its objections as to value, that the debtors be denied the opportunity to amend their schedules to conform with the court’s ruling because the debtors “have not come into this bankruptcy with clean hands and in good faith.” Specifically, Wachovia asserts that the debtors failed to include in their list of assets a 47-unit apartment building known as Hampton Apartments and two automobiles, a Mercedes Benz and Cadillac, which were transferred prepetition to the debtors’ adult children by Mr. Sumerell’s wholly-owned corporation, Bristol University. A hearing on the objections was held and thereafter, the parties filed proposed findings of fact and conclusions of law such that the matter is now ready to be resolved by the court. The following represents the court’s findings of fact and conclusions of law pursuant to Fed.R.Bankr.P. 7052. This is a core proceeding. See 28 U.S.C. § 157(b)(2)(B).

II.

Fed.R.Bankr.P. 4008 sets forth the procedures with respect to exemptions and any objections thereto and provides that “in any hearing [on objections to exemptions] the objecting party has the burden of proving that the exemptions are not properly claimed.” Fed.R.Bankr.P. 4003(c). Such burden is by a preponderance of the evidence. In re Shwley, 163 B.R. 286, 291 (Bankr.W.D.Tex.1993). Accordingly, Wacho-via has the burden of proving that the debtors are not entitled to the exemptions they have claimed.

III.

The court will first address Wachovia’s assertion that the debtors have substantially undervalued their assets. Specifically, Wa-chovia alleges that the household goods and furnishings listed in Schedules B and C as having a collective value of $2,135.00, actually have a fair market value of $27,405.00 based on the appraisal conducted by Wachovia’s expert. The wide disparity between the two amounts is attributable in part to the fact that different valuation methods were applied by the parties. The values set forth in the schedules were based on the debtors’ opinion of the furnishings’ “liquidation value,” 6 while the value asserted by Wachovia is said to be based on “fair market value,” as that term is generally understood.

Testifying at trial as to value was Wacho-via’s expert, Kimball Sterling, a Johnson City appraiser and auctioneer, the debtors’ expert, Rex Davis, and debtor Amy Sumerell. Mr. Sterling stated that he was in the business of evaluating and selling used furniture, antiques, and entire contents of homes and had done so for numerous years. He testified that he frequently testifies as an expert appraiser and has handled numerous estate auctions including that of the late Alex Haley, the noted Pulitzer Prize winner. Based on his examination of the debtors’ household furnishings, Mr. Sterling concluded that the collective fair market value of the furnishings, within ten percent, was $27,405.00. Mr. Sterling testified that he based this amount on what he thought he could sell the items for at an auction with three weeks advertising, and was so confident that he could obtain this price at auction that he was willing to immediately purchase all of the items included in the appraisal for $19,700.00.

*824 Rex Davis, the debtors’ expert, testified that he was in the retail furniture business, having worked for retail furniture stores for the past 32 years, with primary responsibility as vice-president and general manager for the stores’ purchases. In this capacity, Mr. Davis had also bought, sold and traded used furniture and within the past week, had been involved in attempts to sell bankruptcy estate furniture. Mr. Davis testified that he had inspected the debtors’ household furnishings, that the majority of the furniture was in the medium price range and that the total value of the furniture from a retail or a manufacturers’ suggested retail standpoint was $19,-850.00. He opined that if the furniture were liquidated over a quick period of time, “you’d be lucky to get 20$ on the dollar which would be approximately $3,900.00,” and when asked if he thought this was a “fair market value” for used furniture, responded that it was “for used furniture and being able to dispose of it pretty quick. I really can’t say that you could expect much more than that.” On cross-examination when asked his opinion as to the “true value” of the furniture, Mr. Davis testified that he thought the furniture would be worth around 20$ on the dollar on a quick sale.

Mrs. Sumerell testified that since the filing of the schedules, she had revised her estimation of the value of the household goods and furnishings from $2,135.00 to $3,460.00 based on the actual invoices for many of these items of furniture, the majority of which were purchased more than 15 years ago. Using these invoice prices, Mrs. Sumerell estimated the furnishings’ present value and then reduced it by 80% to arrive at the goods’ “wholesale” price, which totaled $3,460.00.

IV.

11 U.S.C. § 522 governs the exemptions available to a debtor in a bankrupt-ey case and provides that the debtor may elect certain specified federal exemptions set forth in subsection (d) of § 522 or the exemptions available to a debtor under applicable state law, unless the state has opted out of the federal exemptions. See 11 U.S.C. § 522(b)(1). Tennessee, along with numerous other states, has opted out of the federal bankruptcy exemption scheme, making the federal exemptions unavailable to a debtor who resides in Tennessee. See Tenn.Code ANN. § 26-2-112; In re Haga, 48 B.R. 492 (Bankr.E.D.Tenn.1985).

The debtors have claimed their household goods and furnishings exempt pursuant to the provisions of Tenn.Code Ann. § 26-2-102 which provides that “personal property to the aggregate value of four thousand dollars ($4,000.00) debtor’s equity interest shall be exempt_” Unlike § 522 of the Bankruptcy Code which defines value for purposes of that section as “fair market value as of the date of the filing of the petition,” 7 Tenn.Code Ann. § 26-2-102 does not define value and no provision of the Tennessee Code supplies a definition of “value” for purposes of this section. It is noteworthy that all the Tennessee exemption statutes that speak in terms of limiting the applicable exemption to a fixed dollar amount use the single word “value” rather than some variation thereof, 8 but again, none indicate what is meant by the word “value.” This court has been unable to locate any reported decision defining “value” as used in these state exemption statutes, although various courts in establishing value for purposes of these statutes have treated value as synonymous with “fair market value” or have referred to or utilized the phrase in their analysis. See Frazier v. Frazier, 221 Tenn. 705, 430 S.W.2d 655 (1968), on remand, 63 Tenn.App. 1, 468 S.W.2d 322 (1970); Keen v. Alexander, *825 195 Tenn. 564, 260 S.W.2d 297 (1958) (courts used term “fair market value” in discussion of extent of debtor’s personal property exemption); Nunley v. The Paty Co. (In re Nunley), 109 B.R. 784 (Bankr.E.D.Tenn.1990); In re Crowell, 58 B.R. 555 (Bankr.M.D.Tenn.1985); Durham v. Montgomery (In re Durham), 33 B.R. 23 (Bankr.E.D.Tenn.1983); Modern Supply Co. v. Lee (In re Lee), 21 B.R. 774 (Bankr.E.D.Tenn.1982) (court’s determination of whether debtors had equity in their home such that they could avoid a judicial hen as impairing their homestead exemption included consideration of home’s “fair market value”); Dickenson v. Penland (In re Penland), 34 B.R. 536 (Bankr.E.D.Tenn.1983) (court referred to property’s “fair market value” in ruling on debtor’s homestead exemption claim).

Assumably because § 522 of the Bankruptcy Code specifically defines value for exemption purposes as fair market value, the debtors concede that fair market value is the appropriate standard, appropriately noting that the Sixth Circuit Court of Appeals, albeit in dicta, has endorsed the fair market value standard. See G.M.A.C. v. Bell (In re Bell), 700 F.2d 1053, 1055 (6th Cir.1983) (discussion of value for redemption purposes). The debtors note, however, that § 522 does not further define the phrase “fair market value” and gives no guidance as to how it should be determined. The debtors assert that there is a split of authority between the different jurisdictions as to the definition of fair market value and maintain that the phrase should be interpreted in a liquidation context, citing In re Walsh, 5 B.R. 239 (Bankr.D.C.1980).

In Walsh, as in the present case, the issue was what standard of valuation should be applied to property claimed as exempt by a debtor under 11 U.S.C. § 522. The court recognized that the usual and accepted meaning of fair market value was that set forth in Black’s Law DICTIONARY which “assumes agreement between owner willing but not obligated to sell for cash and buyer desirous but not compelled to purchase.” Id. at 241, citing Black’s Law Dictionaey 716 (4th ed. 1968). The court observed, however, that the definition is “not invariable” but “varies with the circumstances surrounding a given object and situation to which it is sought to apply the term.” Id., quoting John W. McDougall Company v. Atkins, 201 Tenn. 589, 301 S.W.2d 335, 337 (1957). Concluding that the courts have construed fair market value in the context in which the valuation question arose, the Walsh court held that fan-market value, as it is used to define “value” in § 522, must be interpreted in the liquidation context in a chapter 7 case “inasmuch as the purpose of valuation under the exemption provisions is ultimately to determine whether such property is subject to liquidation by the trustee because it is in excess of specified monetary amounts.” Id.

Despite the debtors’ characterization of a “split of authority” on this issue, Walsh is the only case wherein this contextual approach to evaluation of exemptions has been directly applied. Cf. In re Ricks, 40 B.R. 507, 509 (Bankr.D.C.1984) (in dicta, court cited Walsh with approval in resolving issue of whether value is limited to equity interest). Since the Walsh decision was rendered in 1980, more than half a dozen courts have considered the issue of the appropriate valuation standard for § 522 purposes. All have rejected Walsh by name and have concluded that value should be measured by the traditional concept of fair market value, the amount the debtor would receive from a voluntary and willing buyer if the debtor were not under a compulsion to sell, rather than a hypothetical liquidation. See In re Mitchell, 103 B.R. 819 (Bankr.W.D.Tex.1989); Windfelder v. Rosen (In re Windfelder), 82 B.R. 367 (Bankr.E.D.Penn.1988); In re Allen, 44 B.R. 38 (Bankr.D.N.M.1984); In re Frazier, 33 B.R. 175 (Bankr.D.Md.1983); Swink v. Henderson (In re Henderson), 33 B.R. 149 (Bankr. D.N.M.1982); Nellis v. Rosenbaum (Matter of Nellis) 12 B.R. 770, 772 (Bankr.D.Conn.1981). See also In re Penick, 170 B.R. 914 (Bankr.W.D.Mich.1994) (rejecting Walsh in determining value for redemption purposes under § 722 as inequitably favoring the debt- or and arguing that it would create a new “bankruptcy market” specifically for redemption and exemption purposes).

The most thorough discussion of this issue is that presented by Judge Clark in In re *826 Mitchell, 103 B.R. at 819. Judge Clark noted that in effect, Walsh was urging that the applicable market when one speaks of fair market value is the market available to a bankruptcy trustee and that the values generated in that market will reflect the sales circumstances by being somewhat depressed.

There are a number of difficulties with this position, however. The argument is essentially circular and turns the generally accepted definition of fair market value on its ear. An essential component of fair market valuation is a reasonable holding period, the anti-thesis of Walsh’s “liquidation” market. Nellis v. Rosenbaum (In re Nellis), 12 B.R. 770, 772 (Bankr.D.Conn.1981)....

There should simply be no such thing as a “bankruptcy market” when it comes to fair market value, especially insofar as the holding period is concerned. The directive to find fair market value compels the fact finder to act as though there were no bankruptcy.... [F]air market value must, by definition, be computed as if there were no proceedings to eliminate that market.

Id. at 822.

This court is persuaded by the reasoning and the analysis of Mitchell and the majority cases and specifically rejects Walsh. Both Walsh and the debtors are incorrect in stating that the purpose of valuation under the exemption provision is to aid the trustee in determining whether there is property available to the estate for liquidation. While the values set forth in the schedules may be ultimately used by the trustee for that purpose, the primary purpose of the valuation is to determine that the values do not exceed the monetary limits placed on the exemptions by Congress or, as in this case, the Tennessee legislature. To allow liquidation value rather than fair market value would disregard the “cap” which the legislature has placed on personal property exemptions. As stated by Judge Clark in Mitchell:

The use of liquidation values for purposes of arriving at the cap would tend to encourage debtors to pick the lowest possible values in order to gather up the maximum from the approved list. 9 After bankruptcy (or after the collection action has been exhausted), the debtor could then sell the items at his or her leisure, realizing their true value while the creditors watch in frustration. This result is at cross purposes with the function of the cap, i.e., to prevent abuse by overreaching debtors.

In re Mitchell, 103 B.R. at 824.

Such a result would also ignore that the purposes of the exemptions are (1) to give the debtors a so-called “grub-stake” to begin their fresh start and (2) to act as a safety net, so that the debtor and his family are not completely impoverished due to creditor collection action or bankruptcy such that they become wards of the state. 3 Collier on BANKRUPTCY ¶ 522.02 (15th ed. 1995); Prater v. Reichman, 135 Tenn. 485, 187 S.W. 305 (1916) (the public policy underlying the exemption statutes is to restrain a creditor from satisfying his debt out of certain kinds of property which are necessary for the maintenance of the debtors and their families); 13 Tenn.Juris. Exemptions from Execution and Attachment § 3 (1984), n. 10 citing Lisenbee v. Holt, 33 Tenn. (1 Sneed) 42 (1853) (“It was thought better and more in accordance with humanity and the interest of the state, that creditors should lose their just claims to that extent, than that the wives and children of unfortunate debtors should be reduced to entire destitution, and possibly become a charge to the community.”). The assumption underlying the exemption statutes is that these purposes will be achieved by a debtor retaining rather than liquidating the exempt property as shown by the fact that the exemptions are for the most part designed to preserve the basic necessities for daily living — clothing, shelter, a minimal amount of personalty, and tools of the trade. Accordingly, from a debtor’s point of view, liquidation of exempt property is inapposite. See In re Mitchell, 103 B.R. at 823.

For these reasons, this court holds that fair market value as used in § 522(a)(2) of the Bankruptcy Code has its generally *827 accepted meaning which assumes the volun-tariness of the sale and incorporates an exposure of the items to the market for a reasonable period of time without consideration of the bankruptcy context in which the valuation is being made. One of the most succinct expressions of that standard is that set forth by a bankruptcy court in Ohio as the “price which a willing seller under no compulsion to sell and a willing buyer under no compulsion to buy would agree after the property has been exposed to the market for a reasonable amount of time.” In re Markowitz Building Co., 84 B.R. 484, 487 (Bankr.N.D.Ohio 1988); see also Stein Construction Co. v. King, 643 S.W.2d 329, 330 (Tenn.1982) (“Generally speaking, fair market value constitutes the amount a willing buyer will pay a willing seller for a specific product.”).

V.

The debtors make the further argument that in determining fair market value, there must be a reduction for hypothetical costs of sale. Mr. Sterling testified that if he were to auction the debtors’ household goods and furnishings, his costs would run anywhere from 14% to 35% depending on the size and location of the sale and the requirements of the seller, with his average cost about 25% of the gross sales. The debtors argue that any fair market value determined by this court should be reduced not only by such costs of sale, but also sales tax and a trustee’s statutory commission, asserting that the estate would not realize these sums if the subject property were liquidated.

Again, the debtors are inappropriately applying liquidation considerations to a non-liquidation valuation. As stated above, the amount the estate would receive in a hypothetical liquidation is not the appropriate standard for determining fair market value for exemption purposes.' By definition, in claiming property as exempt, a debtor is proposing that he or she be allowed to retain the property rather than have the property liquidated. Therefore, cases which have considered the issue of valuing property for § 522 ptmposes have refused to deduct transaction costs in the valuation process, concluding that because no transaction costs are contemplated, none may be deducted. See In re Windfelder, 82 B.R. at 372; Anderson v. Lucidore (In re Anderson), 68 B.R. 313 (Bankr.W.D.Penn.1986); Clendennen v. Equibank (In re Clendennen), 67 B.R. 909 (Bankr.W.D.Penn.1986); In re Rehbein, 49 B.R. 250 (Bankr.D.Mass.1985); Matter of Nellis, 12 B.R. at 772. See also Hunter Press, Inc. v. Connecticut Bank & Trust Company, 420 F.Supp. 338, 343 (1976) (court held that for purposes of construing the term “fair valuation” under the Bankruptcy Act, costs of sale should not be subtracted from the market price).

Although the Sixth Circuit Court of Appeals has not specifically ruled on this issue in the exemption context, it has held that in establishing the value of a creditor’s collateral when the property is being retained by the debtors, deduction for purely hypothetical costs of sale is neither required nor permitted. See Huntington National Bank v. Pees, (In re McClurkin), 31 F.3d 401 (6th Cir.1994). At issue in McClurkin was the proper valuation of a secured claim pursuant to the provisions of 11 U.S.C. § 506(a) and whether such valuation should exclude hypothetical sales costs. 10 Section 506(a) of the Code provides that an allowed claim of a creditor secured by a lien on property has a secured claim to the extent of the value of the property and has an unsecured claim for the balance, with the value to be determined in light of the purpose of the valuation and the proposed disposition or use of the property. 11 The Sixth Circuit concluded that *828 where the debtor is retaining the property, deducting purely hypothetical costs of liquidation from the value of the property would give the creditor something less than value and therefore would not be permitted. Id. at 404.

Although the present case involves valuation of property for exemption purposes rather than a valuation of the extent of a secured creditor’s interest in property, the same reasoning applies. In both situations, the debt- or is retaining the subject property, no liquidation will occur and thus no costs of sale will result. Accordingly, it would be inappropriate to reduce the value of the property by costs of liquidation which are purely hypothetical.

VI.

This court having determined that value for purposes of 11 U.S.C. § 522 means fair market value as that term is generally understood without any deduction for hypothetical costs, the court must determine the fair market value of the property in which the debtors are claiming their exemptions. The only testimony as to the fair market value of the debtors’ household goods 12 and furnishings was that presented by Kimball Sterling, Wachovia’s expert, who opined that the fair market value of the subject property was $27,405.00. Mr. Sterling defined fair market value as “when a willing seller and a willing buyer can meet together and can negotiate a price of what something is actually worth — what they are willing to pay for it,” and based his appraisal on what he could receive at auction after three weeks advertising. Clearly, Mr. Sterling utilized the appropriate standard because his definition assumed a non-compulsory sale after a reasonable exposure to the market. Contrarily, Rex Davis, the debtors’ expert, made his determination of value in a liquidation context, defining value as what he could obtain on a “quick sale.” Similarly, Mrs. Sumerell’s valuations were based on “wholesale price,” 20% of what she thought her household furnishings were actually worth.

Notwithstanding the appropriate standard, the debtors seek to discredit the appraisal conducted by Mr. Sterling. They assert that the values placed by him on the furnishings are not reasonable because the majority of their furniture is at least 15-20 years of age and is well used 13 and the values opined by Mr. Sterling in most cases exceed the items’ original purchase prices.

While purchase price is relevant if the purchase were close in time to the determination of value, purchase prices of sales that occurred 15-20 years ago are only remotely relevant to today’s market value. Cf. Matter of Reynolds, 17 B.R. 489 (Bankr. N.D.Ga.1981) (the more recent the purchase, the greater the relevancy of purchase price to current market value). And, while in the debtors’ eyes their furnishings may be well-worn and of little value, in Mr. Sterling’s observation the debtors’ furniture is “premier secondary market items” and “the kind of stuff that today’s young married people are looking for.” The court found Mr. Sterling extremely knowledgeable and credible regarding the current market for antique reproductions, used furniture, antiques and col- *829 lectíbles such as that owned by the debtors. Mr. Sterling’s confidence as to his valuation of the debtors’ goods was exemplified by his offer to immediately purchase the appraised items for $19,700.00. This testimony was extremely persuasive as to value, as it is obvious that someone in Mr. Sterling’s line of work would not make such an offer without the expectation that the items can be resold at a significant profit. Accordingly, with the exceptions discussed below, this court concludes that the fair market value of the items appraised by Mr. Sterling are the values listed by him in his appraisal wherein he sets forth with detail each item appraised by him and its value.

The debtors contend that certain items listed in Mr. Sterling’s appraisal should be excluded because they belong to the debtors’ two adult children who live with the debtors. 14 Specifically, the debtors maintain that Mr. Sterling improperly included in his appraisal furnishings which belong to the debtors’ daughter, consisting of all of the items in the “Twin Bedroom,” excluding the twin beds, and the majority of the furniture listed in the “Bedroom,” i.e., a Victorian bed, one wicker chair, a Bible table, an early cradle, one of seven dolls 15 and a quilt. The debtors further assert that certain of the “Basement” items listed on the appraisal, an Empire Chest, Queen Anne computer table, desk and Lanier copier, belong to their son, Patrick.

Mr. Sterling testified that he included in his appraisal all of the goods and furnishings which he found within the debtors’ house with the exception of certain items in the basement and an exercise machine in the upstairs master bedroom which Mr. Sumerell identified during the appraisal as belonging to his son. Mr. Sumerell, on the other hand, testified that Mr. Sterling ignored the information that some of the basement items (the only items mentioned by name were a copier and exercise equipment) belonged to the debtors’ son and nevertheless included the items in the appraisal. There was no testimony, however, that Mr. Sterling was ever advised that the debtors did not own the “Bedroom” and “Twin Bedroom” items that the debtors now assert belong to their daughter Missy.

Wachovia contends that the debtors should be estopped from asserting that these disputed items are their children’s. Wachovia observes that these items were found in the debtors’ home and the debtors did not indicate in their statement of financial affairs that they were holding property for any other person. 16 The debtors explained their statement of financial affairs’ answer at trial by stating that they did not understand the terminology used in the question and did not consider that they were “holding” this property for their children because their adult children also live in the house.

With respect to the cradle, the quilt and the Lanier copier, an examination of Schedules B and C indicate that these items were not listed in these schedules and thus have not been claimed in this bankruptcy as belonging to the debtors and exempt. Because the debtors have asserted no ownership interest in these items and have correspondingly not claimed them exempt, they should properly be excluded from Mr. Sterling’s appraisal. The court finds it plausible that the debtors might not think of items belonging to their children that live with them when asked if they were “holding” property for some other person. Accordingly, the court is not persuaded that the debtors should be es- *830 topped from denying ownership of these three items.

With respect to the Victorian Bed, the Queen Anne computer table and desk, however, Mr. Sterling was correct in including these items in his appraisal because these items are listed by the debtors in Schedules B and C as belonging to them. Schedules B and C recite that the debtors own and are claiming as exempt, five beds—three beds at $20.00 each plus the twin beds. In his appraisal, Mr. Sterling lists five different beds including the Victorian bed. Because only five beds were found in the house and the debtors assert in their schedules that they own five beds, the claimed exemption in five beds must include the Victorian bed.

Although the debtors testified at trial that the Queen Anne computer table and desk listed on Mr. Sterling’s appraisal and located in the “Basement” belong to their son Patrick, this table and desk are listed in Schedules B and C as property of the debtors and exempt as tools of the trade under Tenn. Code AnN. § 26-2-103. The debtors are barred by the doctrine of judicial estoppel from directly contradicting their own sworn schedules. They can not now deny that they own these items and assert, to the contrary, that they are owned by their children.

With respect to the remaining pieces of furniture that the debtors claim belong to their children, the court is unable to ascertain from the debtors’ generic listing of furniture in their schedules whether these items are listed in the debtors’ Schedules B and C. No effort was made by either party to reconcile the schedules with Mr. Sterling’s detailed appraisal so that a determination could be made as to whether the items found and examined by Mr. Sterling in the debtors’ house were included in their schedules. “If the evidence is such that a decision on a point cannot be made one way or the other, the party with the burden of proof loses.” In re Shurley, 163 B.R. at 291, quoting Texas Distributors, Inc. v. Local Union No. 100, 598 F.2d 393, 402 (5th Cir.1979). Because Wa-chovia has the burden of proof on this issue and tendered no evidence disputing Mrs. Sumerell’s testimony that the items were in fact her children’s (except for the answer to statement 14 of the Statement of Financial Affairs which the debtors have satisfactorily explained), all other items listed above which the debtors assert belong to their children should be excluded from Mr. Sterling’s appraisal.

Although Wachovia asserted in its objection that the debtor significantly undervalued all of their personal property, Wacho-via only presented evidence as to the value of the debtors’ household goods and furnishings and tools of the trade. No proof was tendered by Wachovia to dispute the value placed by the debtors on their firearms, jewelry, clothing and fur coats. Under Fed. R.Bankr.P. 4003(c), the party objecting to a debtor’s exemptions has the burden of proving that the exemptions are not properly claimed. See also In re Shurley, 163 B.R. at 286. Since Wachovia offered no proof as to the value of these items, its objection to the debtors’ claim of exemptions in these items must be denied.

VII.

As noted by Wachovia in its brief, upon a determination by the court that the debtors have undervalued their assets, it will be necessary for the debtors to amend their list of exemptions to set forth the proper values if they desire to continue to assert exemptions in the subject property. Wachovia alleges that the debtors should be denied the opportunity to amend Schedules B and C to accurately reflect the true value of their property, arguing that the debtors have acted in bad faith and with the intent to defraud the bankruptcy estate and its creditors. As evidence of bad faith, Wachovia alleges that Mr. Sumerell has concealed his ownership of Hampton Apartments, a 47-unit apartment building, and that the debtors through Mr. Sumerell’s corporation 17 fraudulently trans *831 ferred title to their two automobiles to their adult children. Wachovia also contends that the debtors’ undervaluation of their assets is evidence of bad faith justifying denial of any amendment.

With respect to Hampton Apartments, it is undisputed that Patrick Sumerell, the debt ors’ son, has actual title to the property, having purchased it from Progressive Enterprises, an apparently unrelated third party, on September 21, 1993. Patrick Sumerell signed a promissory note for $85,800.00 and deed of trust in connection with the purchase, pledging the apartments as security for payment of the note. The evidence indicates that it was originally contemplated that the apartments would be purchased by Bristol University since the purpose of the purchase was to provide housing for the school’s baseball team at its Bristol Campus. Craven Sumerell and the baseball coach for Bristol University negotiated the purchase on behalf of the school and Bristol University made a $500.00 down payment. In a letter dated August 13, 1993, to Bristol University, the agent for the seller made inquiry as to whom would be signing on behalf of Bristol University and Craven Sumerell responded in a handwritten note that he would be signing for the school. There was no evidence as to how it came about that five weeks later, Patrick Sumerell purchased the property instead of Bristol University.

Despite his ownership, Patrick Sumerell had little to do with the apartments. 18 Craven Sumerell maintained and managed the apartments on his son’s behalf, including negotiating leases and filing detainer warrants to evict defaulting tenants until a state court judge informed Mr. Sumerell that only the owner could file such warrants. Rent on the apartments was collected from the Bristol University baseball players by the school’s baseball coach who remitted the funds to the school’s bookkeeper, Phyllis Gosnell. Ms. Gosnell deposited the rent receipts into an apartment account out of which she paid the monthly expenses on the apartments and the mortgage owed by Patrick Sumerell. Both Craven Sumerell and Ms. Gosnell stated that the apartment account had been established by Ms. Gosnell and that only the two of them had signatory authority on the account. Ms. Gosnell also testified the account was a university account. Patrick Sumerell, on the other hand, testified that he had set up the account in his name but admitted that he had no signatory authority on the account and appeared to have no knowledge of Ms. Gos-nell’s signatory authority. Mr. Sumerell also had no knowledge that Bristol University had made a $500.00 down payment on the apartments.

Apparently, neither the debtors’ nor Patrick Sumerell’s 1993 tax return made any reference to the Hampton Apartments. However, the 1994 income tax returns filed by the debtors on April 15, 1995 listed Hampton Apartments as being wholly owned by them. Corr