Most of the time, when you have a confession of judgment, that confession itself is part of a settlement. The judgment is usually for a settlement amount - often something the debtor agreed to pay out in installments over a long stretch of time. It’s used when the creditor is concerned the debtor might not be able to pay it all. So if you are asking whether you can settle one, the honest answer is that you very likely already did. So the real question is: are you still making payments? Are you behind? Or has the creditor already filed the judgment? Each of those situations leaves you with different options, and it’s important to understand the difference between settling a judgment and vacating a judgment.
In a confession of judgment, you sign an admission that you are legally responsible for a certain amount of money. Usually this is signed when you settle a case. The confession is there if and when you miss payments. It lets the creditor collect the money without going through a lawsuit. Normally, if you don’t pay your debts, your creditors have to sue you, and go through a lengthy court process to get a judgment against you. The confession is held in escrow by the creditor’s lawyer. If you miss a payment, the creditor’s lawyer files it with the county clerk. The creditor skips over going to court to get a ruling that you breached your agreement, and just gets a judgment.
This kind of instrument is often part of a settlement that’s spread out over time. For instance, a business owes $10,000 but doesn’t pay. The parties sign a settlement agreement with a payment plan. The debtor also signs a confession for $10,000. If the debtor breaches and stops paying, the creditor can then enforce the whole judgment. This is a good way to ensure people don’t just stop paying. For the creditor, that is the whole point. For you, the flip side is simple. As long as the payments are going on schedule under the settlement, that confession of judgment typically just sits in the lawyer’s drawer. Staying current is the cheapest way to keep it there.
If you’re not current on a settlement that’s protected by a confession of judgment, the scary part is that the confession may have been signed for the full amount. If you break the settlement, the creditor can enforce the whole balance of the judgment - not just the payments you missed. (It’s a deterrent!) At least if it ends up filed, the clerk might take off the money you’ve already paid. So the money you put in before you fell behind is not simply lost.
If you negotiate a settlement with a creditor, you are accepting responsibility for that debt. When you “vacate” a judgment you are cancelling the judgment and asking the court to set it aside. When you have a judgment against you and you want it thrown out, that means you are contesting the debt. A business owner who signed a confession has, in most cases, already done the first. What is left to understand is how the confession becomes a judgment, where it can fail, and what you can and cannot argue once it is filed. New York’s rules show how that works.
New York Confession of Judgment
To register the judgment in New York the creditor has to file a proposed judgment (just the paperwork that clerk will sign); an affidavit from plaintiff saying all those facts are true; and a bill of costs. If the debtor has already paid back a bit of the money, the clerk is allowed to subtract that amount. Sometimes the clerk needs more, for instance the actual written documents that empower them to enforce the judgment upon breach.
In New York, the confession has to be filed within 3 years of being signed or else it isn’t enforceable. As of August 30, 2019, it is unenforceable if signed by people or businesses that don’t live in NY. The only exception to this is if the creditors are government agencies. In that case, they can file against anyone in any county in New York. The confession also has to state the county where you lived when you signed the agreement. The judgment can only be filed in that county, or in the county you live in now if you’ve moved.
An owner who has a copy of a New York confession of judgment should ask the following questions:
- When was the confession signed?
- Is the confession filed within three years of signing?
- Where did you and your business live when the confession was signed? Since August 30, 2019, a confession of judgment from a non-New York resident is unenforceable unless the creditor is a governmental entity.
- What county is listed in the confession of judgment and where is it filed?
- What is the triggering event listed in the confession of judgment?
- Did that event actually occur?
Asking a Judge to Throw That Filing Out
If the creditor has already filed the confession, one option is asking a judge to throw that filing out. There are a couple of narrow ways to do that: show the event that was supposed to “trigger” the judgment never actually happened, or show it was filed too late (more than three years after you signed the document). You can’t use this motion to argue you were swindled, pushed around (duress), or otherwise taken advantage of (overreaching); that has to be a separate lawsuit. If you’re not sure which angle you have, start by learning what arguments are available.
Can You Settle a Confession of Judgment
So, can you settle a confession of judgment? In most cases the settlement is already written into it, and the confession is what makes that settlement hard to walk away from. Your leverage comes from knowing where you stand: keep paying if you can, make sure any payments you made are credited if it is filed, and check the date, the residency and the county against the rules. The wording has to be just right, and a confession that was drafted carelessly is more open to challenge. Always talk to an experienced lawyer before you sign one, or if it’s already been filed.
