HLS 24RS-860 REENGROSSED
2024 Regular Session
HOUSE BILL NO. 580
BY REPRESENTATIVE MUSCARELLO
CIVIL/PROCEDURE: Provides relative to bankruptcy
1 AN ACT
2To amend and reenact R.S. 9:5175(A), (B), and (C)(1), (2)(a), (f), and (g), and (3) and to
3 enact R.S. 9:5175(C)(2)(h) and 5175.1, relative to bankruptcy; to provide procedures
4 for bankruptcy orders and discharges; to provide for an effective date; and to provide
5 for related matters.
6Be it enacted by the Legislature of Louisiana:
7 Section 1. R.S. 9:5175(A), (B), and (C)(1), (2)(a), (f), and (g), and (3) are hereby
8amended and reenacted and R.S. 9:5175(C)(2)(h) and 5175.1 are hereby enacted to read as
9follows:
10 §5175. Order of discharge in bankruptcy; effect
11 A.(1) A judgment debtor in whose favor a United States Bankruptcy Court
12 has entered an order of discharge, or any person whose rights are or may be affected
13 by the order, may bring an action in accordance with the provisions of R.S. 44:114,
14 against the recorder of mortgages of a parish in which the judgment is recorded to
15 declare the judicial mortgage created by its recordation extinguished and order the
16 recordation of the judgment cancelled from the records of the parish and any other
17 parish in which the judgment is recorded.
18 B.(1) (2) Upon proof of the order of discharge, and that the judgment upon
19 which a judicial mortgage is based is for a claim that has been discharged was
20 scheduled or disclosed in the bankruptcy proceeding, the court shall declare
21 extinguished the judicial mortgage evidenced by the recordation of the judgment and
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1 order the recordation of the judgment cancelled unless the judgment creditor, or any
2 other party to the action whose rights are or may be adversely affected by the
3 cancellation, proves that the judgment creditor or such other person possesses equity
4 in property as a result of the judicial mortgage over and above superior liens, in
5 which case the order of cancellation shall expressly exclude its effect as to that
6 property. any property encumbered by the judicial mortgage in which there is equity.
7 (2) If a bankruptcy court order authorizing the sale of property free and clear
8 of all judgments, mortgages, and privileges does not specify the discharged
9 judgments, mortgages, or privileges to be cancelled, the trustee or former trustee in
10 the proceedings, or his attorney of record, may specify by affidavit which discharged
11 judgments, mortgages, or privileges are to be partially cancelled as to the particular
12 property subject to the order. The affidavit and a Request to Cancel shall be filed
13 with the bankruptcy court order. The affidavit shall contain all of the following
14 information:
15 (a) A statement that the debtor filed a petition under the United States
16 Bankruptcy Code.
17 (b) The name of the court where the bankruptcy proceeding was filed.
18 (c) The date on which the petition was filed.
19 (d) A statement that the debt or debts upon which the judgment, mortgage,
20 or privilege is based were listed in the bankruptcy proceeding.
21 (e) A description of the particular property to be released and a statement
22 that the property is free and clear of all judgments, mortgages, or privileges.
23 (f) A listing of the judgments, mortgages, or privileges, including the clerk's
24 office identification by instrument number, book, or folio.
25 (g) A certified copy of the bankruptcy court order.
26 C. B.(1) A judgment debtor may obtain a partial cancellation of the
27 inscription of a judgment as it affects property not owned by the judgment debtor on
28 the date of his filing a petition the filing of a petition or at any time prior to the
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1 discharge order under Chapter 7 or Chapter 13 of the United States Bankruptcy Code
2 upon the filing of an affidavit in accordance with this Subsection.
3 (2) The affidavit shall contain all of the following:
4 (a) A statement that the judgment debtor filed a petition under Chapter 7 or
5 Chapter 13 of the United States Bankruptcy Code.
6 * * *
7 (f) A copy of the schedule or schedules listing the debt. A statement that the
8 affiant is liable to and shall indemnify the clerk or recorder and any of his or her
9 employees or agents relying on the affidavit for any damages they may suffer as a
10 consequence of such reliance.
11 (g) A copy of the discharge order. A copy of the schedule or schedules
12 listing the debt.
13 (h) A copy of the discharge order.
14 (3) Upon the filing of an affidavit in compliance with this Subsection, the
15 recorder shall partially cancel the judgment insofar as it affects the property
16 described in the affidavit and any property that may have been acquired after the date
17 stated in Subparagraph (2)(c) of this Subsection that the debtor filed his the petition
18 for bankruptcy.
19 * * *
20 §5175.1. Bankruptcy order authorizing sale of property
21 If a United States Bankruptcy Court order authorizing the sale of property
22 free and clear of all liens, judgments, mortgages, and privileges does not specify the
23 liens, judgments, mortgages, or privileges to be cancelled, a Louisiana licensed
24 attorney may specify by affidavit which liens, judgments, mortgages, or privileges
25 are to be partially cancelled as to the particular property subject to the order. The
26 affidavit and a Request to Cancel shall be filed in the mortgage records of the parish
27 in which the property is situated with a certified copy of the entire bankruptcy court
28 order including all attachments thereto. The affidavit shall contain all of the
29 following information:
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1 (a) A statement that the debtor filed a petition under the United States
2 Bankruptcy Code.
3 (b) The name of the court where the bankruptcy proceeding was filed.
4 (c) The date on which the petition was filed.
5 (d) A statement that the debt or debts upon which the judgment, mortgage,
6 or privilege is based were listed in the bankruptcy proceeding.
7 (e) A full legal description of the particular property subject to the order.
8 (f) A listing of the liens, judgments, mortgages, or privileges, including the
9 clerk's office identification by instrument number, book, or folio, or by whatever
10 local method the clerk’s office identifies such records.
11 (g) A statement that each holder of the liens, judgments, mortgages, or
12 privileges sought to be partially cancelled was provided notice of the bankruptcy
13 court order.
14 (h) A statement that the affiant is liable to and shall indemnify and hold
15 harmless the clerk or recorder, and any of his or her employees or agents, relying on
16 the affidavit for any damages they may suffer as a consequence of such reliance.
17 Section 2. This Act shall become effective upon signature by the governor or, if not
18signed by the governor, upon expiration of the time for bills to become law without signature
19by the governor, as provided by Article III, Section 18 of the Constitution of Louisiana. If
20vetoed by the governor and subsequently approved by the legislature, this Act shall become
21effective on the day following such approval.
DIGEST
The digest printed below was prepared by House Legislative Services. It constitutes no part
of the legislative instrument. The keyword, one-liner, abstract, and digest do not constitute
part of the law or proof or indicia of legislative intent. [R.S. 1:13(B) and 24:177(E)]
HB 580 Reengrossed 2024 Regular Session Muscarello
Abstract: Provides procedures for bankruptcy orders of discharge and sale of property.
Present law (R.S. 9:5175) provides that any person whose rights are or could be affected by
a bankruptcy order discharging a judgment debtor may bring an action against the recorder
of mortgages to extinguish and cancel the judgment creating the judicial mortgage.
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Present law also provides that the court shall declare a judicial mortgage extinguished upon
proof of the order of discharge and that the judgment is for a claim that has been properly
included in the discharged debtor's bankruptcy proceeding.
Proposed law retains present law and corrects the language referencing a discharged claim
and clarifies that claims are properly included in a bankruptcy proceeding by being
scheduled or disclosed in the bankruptcy proceeding.
Present law authorizes a judgment debtor to obtain a partial cancellation of an inscription
of a judgment affecting property not owned by him on the date of his filing of a petition
under Chapter 7 or Chapter 13 of the U.S. Bankruptcy Code upon the filing of an affidavit
that meets the requirements of present law.
Proposed law retains present law but removes the limitation to bankruptcy petitions filed
under Chapter 7 or Chapter 13 and allows application of the law under any Chapter of the
U.S. Bankruptcy Code.
Proposed law also requires a statement in the affidavit that the affiant is liable to and shall
indemnify the clerk or recorder and any of his employees or agents relying on the affidavit
for any damages suffered.
Proposed law authorizes a La. licensed attorney to specify by affidavit the liens, judgments,
mortgages, or privileges to be cancelled if the order does not provide that information. The
affidavit must contain the information required by proposed law and be filed with a Request
to Cancel and a certified copy of the bankruptcy court order in the mortgage records of the
parish in which the property is situated.
Effective upon signature of governor or lapse of time for gubernatorial action.
(Amends R.S. 9:5175(A), (B), and (C)(1), (2)(a), (f), and (g), and (3); Adds R.S.
9:5175(C)(2)(h) and 5175.1)
Summary of Amendments Adopted by House
The Committee Amendments Proposed by House Committee on Civil Law and
Procedure to the original bill:
1. Add technical changes.
2. Add "liens" to the list of records that a La. licensed attorney may use to specify
the particular property subject to the bankruptcy order.
3. Provide that a La. licensed attorney may specify by affidavit which liens,
judgments, mortgages, or privileges are to be partially cancelled as to the
particular property subject to the bankruptcy order.
4. Provide that an affidavit that specifies a particular property subject to the
bankruptcy order shall include a statement that the holder of the lien, mortgage,
or privilege was provided notice of the court order.
5. Add an effective date.
The House Floor Amendments to the engrossed bill:
1. Add technical changes.
2. Specify that the judgment upon which a judicial mortgage is based is for the
claim being discharged.
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3. Specify that the order of cancellation shall expressly exclude any property
encumbered by the judicial mortgage.
4. Provide that a judgment debtor may obtain a partial cancellation of the
inscription of a judgment as it affects property not owned by the judgment debtor
on the date of the filing of a petition at any time prior to the discharge order.
5. Provide that a statement that each holder of the liens, judgments, mortgages, or
privileges sought to be partially cancelled was provided notice.
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