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Owners of historic mansion file Chapter 13 bankruptcy

The Morey Mansion is a historic Victorian mansion which was built in 1890. Many readers in Texas and elsewhere may remember the property as being part of the 1952 film titled 'Talk About a Stranger.' It was also in a 2009 episode of 'The Outsiders' which helped to fuel existing myths of supernatural activity within the historic residence. The mansion is now part of a debt reorganization proceeding which is being played out in bankruptcy court.

The current proprietors of the historic property filed Chapter 13 bankruptcy in mid-November. They are seeking to reorganize their debt in an attempt to hold on to the mansion which spans 1.7 acres of land. The mansion had set for a trustee's sale for the day after the initial bankruptcy filing. The previous owner sold the property for $1.7 million in 2010 and still possesses a promissory note for $900,000 on the mansion. The promissory note is set to be payable in early Sept. 2015.

However, the current owners have not been making their payments in a timely manner and, according to the previous owner, have not made a payment for at least 16 months. The previous owner claims this has caused her difficulty. She objected to the bankruptcy petition filed by the current owners, arguing that the current owners do not have enough income to cover unmet payment obligations.

Now, the bankruptcy case has been switched to a Chapter 7 action, however the bankruptcy petitioners have filed a petition asking to keep the home in order to sell it as an exempt property. In Texas and elsewhere, a Chapter 7 bankruptcy will usually allow for the discharge of unsecured debt, though it does not guarantee exempting secured debts such as real estate. Chapter 13 actions, on the other hand, are designed to reorganize debts into more manageable payment schedules under the supervision of the court.

Source: Press-Enterprise, "REAL ESTATE: Morey Mansion dodging foreclosure," Debra Gruszecki, Feb. 15, 2013

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