The End of Out of State Confessions of Judgment for Non-Resident Debtors

In New York the confession of judgment is supported by the affidavit of the debtor-defendant. Up to now, CPLR 3218 allowed a non-resident debtor to state "the county in which entry [of judgment] is authorized," and for judgment to be entered in that county.

Today Governor Cuomo signed into law the new restriction on confessions of judgment: they cannot be used against out-of-state debtors (2019 Bill Text NY S.B. 6395).

Now, judgments on confession may only be entered in the county where, as stated in the affidavit, the debtor resided, or where the debtor resided when the affidavit is filed.

This removes an important tool of the small business finance industry, where the COJ has been heavily used.

Pre-existing unfiled confessions of judgment appear to be at risk. Do creditors have a property-like right to proceed with a particular civil remedy? While opinions differ, we may see challenges for this reason.

Stay tuned.