When you sign a promissory note for a mortgage loan, you agree to pay back the money borrowed in installments over a set period of time. New Jersey has a statute of limitations on mortgage foreclosure complaints filed by lenders. If the bank fails to complete the foreclosure before the statute of limitations runs out, you may be able to stay in the home after all.

Case in point: In 2007, a borrower purchased a home in Morris County, New Jersey. However, he defaulted after making only three payments. Here’s what happened next:

• The lender filed a foreclosure complaint in late 2007 in the NJ Superior Court
• Three years later, in 2010, the court alerted the lender that errors had to be fixed in the foreclosure complaint
• Three more years passed. Since it had not received adequate response from the lender, the Superior Court issued an order dismissing the foreclosure complaint entirely.

When the borrower filed for Chapter 7 bankruptcy protection in 2014, he thought he was in the clear since six years had passed and the statute of limitations on foreclosure complaints had passed. The lender, of course, countered saying the enforcement of the note should fall under the 20-year limitation period recognized by common law in New Jersey.

Here’s a case of “it pays to fight City Hall.” The US Bankruptcy Court for the District of New Jersey disagreed with the lender. The end result? The borrower was able to keep his house – now free and clear of any loan.

The court pointed to the NJ Fair Foreclosure Act, N.J.S.A. § 2A:50-56.1. which states that a mortgagee and its servicer are unable to enforce their rights under a note and accelerated mortgage more than six years following the borrower’s default.

If you are facing foreclosure, it’s not likely you’ll get so lucky as to have your paperwork fall through the proverbial cracks. However, if you are in jeopardy of losing your home to foreclosure and are considering bankruptcy, it is in your best interest to contact a skilled bankruptcy lawyer right away.

An experienced attorney like Joel R. Spivack Esq. will protect your rights, your assets and your sanity. Contact him today.