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MortgagePoint » Your Trusted Source for Mortgage Banking and Servicing News 40 July 2023 F E A T U R E I DEA Law Group, along with lenders, borrowers, and debt collectors, have been closely monitoring the Colorado Supreme Court for a decision on U.S. Bank Nat'l Ass'n v. Silvernagel. The Colorado Appellate Court had previously ruled that discharge of a debtor in bankruptcy trig- gered the statute of limitations on a claim to foreclose based upon a deed of trust. On April 24, 2023, the Colorado Supreme Court unanimously reversed the decision of the Colorado Court of Appeals and held that a discharge in bankruptcy does not trigger the statute of limitations on a claim to foreclose based on a deed of trust. U.S. Bank Nat'l Ass'n v. Silvernagel—P.3d—Case No. 21SC836, 2023 WL 3049067 (Colo. Apr. 24, 2023 Over the last five years, the issue of when the statute of limitations is triggered has arisen in borrower complaints for declaratory judg- ment and quiet title actions in Colorado, Ari- zona, and Washington courts. The complaints generally allege that the date of the bankruptcy discharge starts the statute of limitations clock and therefore limits the lender's right to foreclose. This important decision clarifies that discharge does not start the running of the statute of limitations clock. Pursuant to Colorado Revised Statute 13-80-103.5(1)(a), a lender has a six-year period to enforce rights set forth in a debt instru- ment securing the payment of any debt. This limitations period is applicable to most promissory notes, security agreements, and deeds of trust. Generally, C.R.S. 13-80-108(4) dictates that the six-year period begins to run when a claim accrues. A claim under an instrument securing or evidencing any debt accrues when each installment becomes due. If an agreement provides for installment payments, a separate cause of action accrues each month that a payment is not made. This results in some claims being expired and others that have not accrued and therefore remain within the six-year statute of limita- tions. The Plaintiff in Silvernagel argued that the bankruptcy discharge automatically accelerates the accrual of the cause of action. In bankruptcy, the discharge provides the debtor/borrower with the discharge from personal liability to the lender. As a result, the lender cannot pursue the debt from the borrower personally; rather the debt can only be enforced by foreclosing on the property, an in rem action. In Silvernagel, the Colorado Court of Ap- peals held that even though the lender never took any action to accelerate the note, the discharge in bankruptcy alone automatically caused the accrual of the cause of action, which triggered the six-year period to fore- close on the property secured by the deed of trust. The bankruptcy discharge, according to the Colorado Court of Appeals' decision, be- gins the statute of limitations clock running regardless of the intentions of the borrower or the lender. According to the Court of Ap- peals decision, the discharge in bankruptcy of the borrower's personal obligation on the debt was the equivalent of the note maturing and triggering the statute of limitations. The Colorado Supreme Court relied on settled case law to reverse the decision of the COLORADO SUPREME COURT WEIGHS IN ON BANKRUPTCY & FORECLOSURE A recent Colorado Supreme Court decision held that a discharge in bankruptcy does not trigger the statute of limitations on a claim to foreclose based on a deed of trust. B y C A R E N J AC O B S C A S T L E a n d J E N N I F E R R O G E R S C A R E N J A C O B S C A S T L E is a Senior Mortgage Servicing Attorney at IDEA Law Group. Castle has over 30 years' experience in the mortgage servicing industry and many honors. She is a past President of USFN and was the organization's first female president. She also served as the first Chairperson of the Board of the Legal League 100. Castle was honored by the Five Star Institute in 2011 for outstanding leadership and service to the housing industry, and received the USFN member of the year award in 2012. She has participated on numerous high-level committees, including the U.S. Department of the Treasury and the Mortgage Bankers Association of America. J E N N I F E R R O G E R S is a Managing Partner at IDEA Law Group, LLC. For 20 years, Rogers' practice has primarily focused on representing mortgage lenders and services in real estate, title curative matters, routine and complex civil litigation, bankruptcy, creditor's rights, residential and commercial foreclosures, and evictions. Rogers is a founding member of the Colorado Creditor's Bar Association. She is licensed to practice law in Colorado.