All You Need To Know About Confession Of Judgement

Are you wondering what confession of judgment means? If yes, then you have come to the right place. Simply put, a confession of judgment is a written agreement that the defendant signs. This agreement accepts the liability and amount of damages agreed on in the trial. In this article, we will discuss all elements associated with confession of judgment. 

What Is A Confession Of Judgment?

Before you go into the details, let us understand the concept of confession of a judgment. A confession of judgment (COJ) is a legal document that is an agreement that enables a lender to avoid a lawsuit. Similarly, it also allows obtaining a court-ordered judgment to begin the collection on debt after a loan has defaulted. 

On the other hand, COJ is also a legal device, which is a clause in a contract. In such a contract, a clause remains where the debtor agrees to allow a creditor to acquire a judgment against the debtor. Moreover, this is only during the nonoccurrence of payment and often without any advised warning or notice. 

Similarly, such clauses might require the debtor to waive their right to assert any defense against the entry of judgment. Or be represented by an attorney hired by the creditor. 

On the other hand, confessions of judgment tend to be controversial. They are regularly challenged on the grounds of the facilitation of predatory lending practices, along with violations of due process rights. 

Purpose Of Confession Of Judgement

You must be wondering about the purpose of a confession of judgment. As you know by now, a confession of a judgment is a written statement signed and verified by the defendant through oath. These papers are submitted to the court through the clerk for entry. 

Moreover, it can also be entered in any court having jurisdiction over the total amount involved. Similarly, the judge signs the judgment specifying the principal due, interest accrued, and the cost incurred by the creditor. 

The primary purpose of the confession of judgment is that once it has been executed, the COJ will be kept by the plaintiff. Moreover, it will not be utilized or filed with a court of law. Moreover, this will only apply when the specific payments have already been made. 

If so, the confession of judgment might be returned to the defendant, unfiled, beginning when the debtor has completed all payments. 

On the other hand, if the payments are not made on time or as agreed, the lender or the creditor can feel that they can use the COJ to get filed through courts. This will allow the plaintiff to use all the available tools to collect judgment, similar to an entirely held trial. 

Usage Of Confessions Of Judgement

There are a variety of uses for confession of judgment, like levying your bank accounts and seizure of assets. Moreover, the confession of judgment also can act as a lien on receivables and property. 

In various situations, an aggressive bank account levy is completed successfully without any warnings. Due to this, your bank account will not notify you before your banking account is frozen or emptied. 

Moreover, if you do business or have a personal banking account in the state of New York, you’ll observe that the plaintiff has already swiped up your bank account. This means the moment the confession of judgment has been signed into a court order, the judgment will make your accounts be swiped off within a couple of days after the judge’s order. 

Similarly, the state of New York has been a state that has primarily utilized confession of judgment. Due to this, most creditors tend to conduct their business in this location. Section 3218 of New York’s Civil Practice Law & Rules (CPLR) allows confessions of judgments to be filed within the state. 

Moreover, you will also observe that many inconsistencies were observed after the investigation by the New York Marshall’s Office for abusive collection activities. Similarly, the investigation showcased how the office benefited financially from its overly aggressive collection strategies. 

In other words, the strategies used by the New York Marshall’s Office had been beneficial for MCA businesses. The whole process also made headlines across the state. This led to the amendment of CPLR 3818 in 2019 as a remedy for the abuse that was going on. Similarly, this amendment also restricted the usage of confession of judgment for residents and businesses domiciled in New York.

Should I Sign A Confession Of Judgement?

A big question arises in your mind: whether to sign a confession of judgment. This document is a powerful tool creditors use to expedite the procedure of acquiring a civil judgment. In such an event, the debtor tends to initiate a condition of the confession of judgment. Moreover, it could include missing a required payment, the creditor filing an affidavit with the court and obtaining judgments for payment collection. Similarly, this could happen all without the requirement of bringing an actual lawsuit to prove the case. 

As a legal professional, I would suggest that it is wise not to sign a confession of judgment. Similarly, COJ is a kind of agreement that is included within merchant cash advances. Due to this, you must be aware of unfair terms that might be included within the confession of judgments. 

Similarly, suppose your advance agreement does contain a clause regarding confession of judgment. In that case, you are advised that you should sign it only after consulting with an experienced civil lawyer first. 

Final Words 

Now, you better understand the workings of a confession of judgment within the realm of creditor & debtor relationships. Moreover, I will also suggest that if you have further doubts about this legal clause, you should consult an experienced business debt lawyer. Similarly, contacting a good law firm is also a wise decision—best of luck.

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