As of recently, our law firm has experienced an increase in the volume
of requests for assistance with Confessions of Judgment entered in connection
with defaulted business loans and merchant cash advance debts. A
Confession of Judgment (“COJ”) is an affidavit in which a party admits liability and allows the lender
to enter judgment upon the occurrence of a specific condition, such as
missing a required payment.
If you’re borrowing money, or resolving an outstanding obligation,
you might be asked to sign a Confession of Judgment. While your lender
may attempt to convince you that executing a COJ is standard procedure,
you will want to do your research and understand the potential ramifications
before you sign the affidavit.
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Should I sign a Confession of Judgment?
A Confession of Judgment is a powerful tool used by lenders to expedite
the process of obtaining a civil judgment. In the event that the obligor
triggers a condition of the COJ, such as missing a required payment, the
issuer may file the affidavit with the court and obtain a judgment to
collect the money – all without needing to bring an actual lawsuit
to prove their case. The judgment can be collected by seizing the borrower’s
bank account, wage garnishment, and liens.
Since a lender can file a Confession of Judgment without providing specific
notice to the borrower, signing a COJ can diminish a borrower’s
ability to dispute the claim and argue a defense. As such, in many situations,
it may be in the borrower’s best interest to avoid signing a COJ.
If you’ve already signed a Confession of Judgment, don’t despair.
There still could be options for relief!
Resolving a Confession of Judgment
By way of example, our office assisted an individual that signed a COJ
as part of an application for a merchant cash advance. He defaulted on
the cash advance payment plan, which triggered the lender to file the
COJ affidavit with a New York court. Judgment was entered in excess of
$85,000. Within two weeks of the confession being filed, his businesses
bank account was restrained to the tune of $55,000.
The client was seeking options to resolve the debt so he could refocus
on generating business. Since his bank account was already frozen, we
had a limited amount of time to work towards a resolution, otherwise,
the funds may be seized and applied towards the full balance. We were
able to negotiate a settlement of about $70,000. Given the circumstances,
the client was relieved to have saved over $15,000 and at the same time
fully satisfy his obligation. He was no longer in danger of having his
bank account frozen.
Vacate A Confession of Judgment
There are some circumstances that could merit
vacating a confession of judgment. For example, a confession of judgment may be vacated if the triggering
event (ie. default of the payment plan) did not occur, or the COJ is facially
insufficient. However, if the borrower seeks to allege that the COJ is
based on fraud, duress, or overreaching, a motion to vacate would not
be proper. The borrower should assert such defenses in a separate plenary
action. Furthermore, COJ’s are only valid for a period of 3-years,
pursuant to NY CPLR 3218.
Think Twice Before Signing a Confession of Judgment
When you’re entering into an agreement with a creditor, you may believe
that you will be able to repay accordingly and that signing a Confession
of Judgment is inconsequential. However, situations can arise and factors
outside your control may cause you to miss a payment and trigger an expedited judgment.
Signing the affidavit of Confession of Judgment can reduce the remedies
you have to resolve the debt in the event that you default. When you sign
a Confession of Judgment, you can lose the ability to contest the claim
and argue your defenses in court. If possible, explore whether your creditor
would allow you to avoid signing a COJ, and if not, then consider whether
you can work with another lender with more reasonable requirements.
Help with Confession of Judgment in New York
New York lawyers for a free evaluation to learn how our team can help resolve your debt.
Regardless of whether your confession of judgment stems from a merchant
advace, business loan, or other debt, our team can help you explore your
available resolution options. If a judgment has been entered against you
by an affidavit of confession, and you want to fight or settle the judgment,
trust our attorneys to guide you accodingly.
Contact our new york lawyers at (888) 301-0584 to schedule your