Is a confession of judgment enforceable in New York after the 2019 change?

This page explains New York law. A confession of judgment is a sworn statement in which a debtor admits owing a sum and authorizes the creditor to enter a judgment for it without a lawsuit. In New York the creditor files the affidavit with a county clerk, the clerk enters judgment in the Supreme Court, and the judgment can be enforced like any other (CPLR 3218(b)). KOR Law LLP's debtor and creditor practice represents business owners and creditors in disputes over these judgments.

What changed in 2019?

The legislature amended CPLR 3218 by chapter 214 of the Laws of 2019, signed August 30, 2019. The State Senate's bill memo, written at the request of the Chief Administrative Judge, explains the purpose: creditors, often from out of state, had been entering confessions in New York counties against out-of-state small business owners with no connection to New York, and then freezing and seizing their assets far from where the agreement was made. The amendment limits filing to in-state debtors, based on where the debtor lived when the affidavit was signed or lives when the judgment is filed, while letting government law enforcement agencies file in any county. The memo states that the change took effect immediately and applies to confessions filed on or after that date.

What does a valid confession have to contain?

For a business, the statute says a non-natural person "resides in any county where it has a place of business" (CPLR 3218(b)). A company with no place of business in New York has no New York county in which a creditor other than a government agency can file its confession.

How does a confessed judgment get entered and enforced, step by step?

1. The affidavit is signed. For example, as part of a financing, settlement or forbearance deal, and the creditor holds it.
2. A default is claimed. The creditor decides the debtor has not paid as agreed.
3. Filing. Within three years after the affidavit was executed, the creditor files it with the clerk of the proper county (CPLR 3218(b)).
4. Entry. The clerk enters a judgment in the Supreme Court for the sum confessed and taxes $15 in costs, plus taxable disbursements (CPLR 3218(b)). No judge reviews the merits first.
5. Enforcement. The judgment can be docketed and enforced like a Supreme Court judgment in an action (CPLR 3218(b)): restraining notices on bank accounts, income executions and property executions. If part of the debt is not yet due, executions may issue only for the sum that has become due, and the judgment stays as security for the rest (CPLR 3218(c)).

Many debtors first learn of the judgment when a bank account is frozen. What to do at that point is explained in what you can do about a restraining notice on your New York bank account.

How can a confessed judgment be challenged?

• Wrong county or late filing. A filing outside the counties CPLR 3218(b) allows, or more than three years after the affidavit was signed, does not meet the statute.
• A defective affidavit. One that omits the county of residence or fails to state concisely the facts out of which the debt arose and show the sum is justly due (CPLR 3218(a)).
• Fraud or misconduct. The court that rendered a judgment may relieve a party from it for fraud, misrepresentation or other misconduct of an adverse party, or for lack of jurisdiction (CPLR 5015(a)(3), (4)).
• The amount. If the confessed sum is not justly due, for example because payments were not credited, that goes to the heart of 3218(a)(2).
• The underlying deal. Where the financing behind the confession carried an unlawful rate, usury may come into play for loans below the thresholds in General Obligations Law 5-501(6); see whether your commercial loan is usurious under New York law.

A motion to vacate is made in the Supreme Court that entered the judgment, and it can be paired with a request to stay enforcement while it is decided. The general rules on relief from judgments are in whether you can undo a default judgment in New York.

What about a confession entered in another state?

New York's simple filing procedure for out-of-state judgments does not cover them. Article 54 of the CPLR defines a "foreign judgment" to exclude one "obtained by default in appearance, or by confession of judgment" (CPLR 5401). A creditor holding another state's confessed judgment must sue on it, or move for summary judgment in lieu of complaint, which gives the debtor a chance to respond before any New York judgment is entered. The routes are compared in whether a judgment from another state or a federal court can be enforced in New York. The motion procedure is in what a CPLR 3213 motion is.

What changes the answer?

• Where the debtor lived. At signing or at filing, as the affidavit and the facts show (CPLR 3218(a)(1), (b)).
• For a company, where it does business. Any county where it has a place of business (CPLR 3218(b)).
• When it was filed. Within three years after execution, and the 2019 rule applies to confessions filed on or after its effective date (CPLR 3218(b); 2019 bill memo).
• Who the creditor is. A government agency enforcing civil or criminal law may file in any county (CPLR 3218(b)).
• Joint debtors. A judgment confessed by only some joint debtors is entered and enforced only against those who confessed it (CPLR 3218(d)).
• Where it was entered. An out-of-state confessed judgment needs a new action or a CPLR 3213 motion in New York (CPLR 5401).

For example: a New Jersey business and a Kings County filing

Common mistakes

• Signing a confession as a formality. It lets a creditor get a judgment without a lawsuit (CPLR 3218(b)).
• Assuming it is unenforceable because the debtor is out of state. The county rule turns on residence and, for companies, any place of business in New York.
• Ignoring a frozen account. Restraints have short deadlines; act at once.
• Missing the three-year point. A confession filed more than three years after execution falls outside CPLR 3218(b).
• Signing one inside a forbearance without reading it. See what you give up when you sign a forbearance agreement.

What to do this week

1. Get a copy of the affidavit of confession and the judgment from the county clerk's file.
2. Check the stated county of residence, the date signed and the date filed.
3. List every place of business the company had when the affidavit was signed and when it was filed.
4. Compare the confessed sum with your payment records.
5. Gather the financing or settlement agreement behind the confession.
6. Speak with a lawyer about a motion to vacate and a stay before more funds are restrained.

Frequently asked questions

Does a judge approve a confession of judgment before it is entered?

No. The clerk enters the judgment on the filed affidavit (CPLR 3218(b)). Court review comes only if the debtor moves to vacate it.

Can a confession be filed against someone who has died?

No. No judgment by confession may be entered after the defendant's death (CPLR 3218(b)).

If I co-signed with a partner, can the judgment be entered against both of us?

Only against those who confessed it. Where not all joint debtors join in the confession, the judgment is entered and enforced only against those who did, and it does not bar an action against the others (CPLR 3218(d)).

How much interest does a confessed judgment carry?

Judgments carry the statutory rate in CPLR 5004. If the debt is a consumer debt, the affidavit must say that the consumer debt rate applies (CPLR 3218(a)(1)). The interest rules are explained in how long a New York judgment lasts and how much interest it adds.

Can the creditor collect the full amount if installments are not yet due?

Executions may issue only for the sum that has become due; the judgment remains as security for later installments, and further executions may issue as they come due (CPLR 3218(c)).

Does the 2019 rule apply to government agencies?

No. A government agency engaged in enforcing civil or criminal law may file an affidavit in any county in the state (CPLR 3218(b)).