If you have been contacted by a mortgage lender, collection agency, debt buyer, or a law firm in Tennessee regarding a “deficiency” after your home was foreclosed upon, please read the following inasmuch as you have defenses and potential causes of action . . .
In Tennessee, a creditor can sue for breach of contract (i.e. to recover unpaid debt) for up to 6 years from the date of the default in payment.
However, Tenn. Code Ann. § 35-5-118(d) provides that a post-foreclosure action to obtain a deficiency judgment “shall be brought not later than the earlier of:
(A) Two (2) years after the date of the trustee’s or foreclosure sale, exclusive of any period of time in which a petition for bankruptcy is pending; or
(B) The time for enforcing the indebtedness as provided for under §§ 28-1-102 and 28-2-111.
So, the creditor has to sue on the earlier of two years or within the original 6 year statute of limitations. Two years is generally going to be the earlier of those two.
For many creditors, waiting a few years after a foreclosure is a reasonable move, to see if the debtor’s fortunes turn around. But, under this statute, a creditor can’t wait too long, and no later than 2 years.
If you’ve received letters or have been sued under the aforementioned scenario above, contact us at Barnette Law Offices!