Does a Confession of Judgment in New York Still Apply to Out of State Businesses in 2026?

You run a business. It’s not in New York. Times have gotten lean, and you’re making late payments on some big obligations. Then you remember that confession of judgment you signed a few years ago. “Oh, man. Aren’t I going to have to pay these people? And what about that confession of judgment I signed? Aren’t they going to turn that on me?” Can it be stopped? In other words, can you be released from the confession you signed years ago? It depends on the particular conditions and circumstances at play.

A confession of judgment allows a creditor to obtain a court judgment against you, even without suing you in court. This is very different from the usual lawsuit, in which the party bringing the lawsuit has to prove its case before a judge. Basically, you agree to lose. For an owner outside New York, though, a New York statute pretty much kills the enforcement of confessions of judgment against people who are not New York residents.

CPLR 3218

In 2019, the New York State Legislature amended CPLR 3218 and prohibited creditors from filing confessions of judgment against nonresidents. The prohibition was effective immediately. But what if you signed it before 2019? Yes, it applies. The statute doesn’t say it applies only to confessions signed after the amendment; it says confessions filed after the amendment. The new law applies to confessions of judgment that are filed after the new law, not confessions that are signed after the new law.

Upfront Megatainment, Inc. V. Thiam

The case to watch is an Appellate Division, First Department case from February 2025: Upfront Megatainment, Inc. v. Thiam. Back in 2018, the parties settled a lawsuit. The defendant agreed to pay a certain amount by installments. And the defendant signed a confession of judgment. If he missed a payment, the plaintiffs could file it and recoup the remainder of the funds due and reasonable attorneys’ fees. Here is the story for the business owner:

Defendant does not pay the final payment. Plaintiff fails to file the confession of judgment. Plaintiff instead files a regular lawsuit on the settlement agreement and seeks to recover the outstanding balance and its attorney’s fees expended in trying to collect that balance. Settlement agreement provides that fees may be recovered by confession of judgment only. Trial court lets the fee claim proceed. First Department unanimously overturns.

The defendant not only was not a New York resident, but he also lived in two states - Georgia and California. And the court found that “CPLR 3218, as amended, prohibits a party from enforcing a confession of judgment against a nonresident of New York State.” Even if it had been enforceable, the confession “was not an agreement to pay attorneys’ fees, but at most was merely evidence of an agreement.”

Next, the court reviewed the settlement agreement. Fees were available by filing the confession, and only by filing the confession. Plaintiffs, instead, sued the defendant in what’s called a plenary action on the settlement agreement. Hence, absent any agreement, statute, or law allowing plaintiffs to recover attorneys’ fees incurred in suing on the settlement agreement, plaintiffs cannot recover such fees.

Generally speaking, if you get sued and lose, you don’t have to pay the winner’s lawyers. We have what they call in lawyer-speak the American Rule, which means that lawyers fees are a cost of litigation and generally the winner can’t recover lawyers fees from the loser unless there is an agreement, a statute or a court rule that permits it. So it is entirely possible to get sued in New York and, even if you lose, not have to pay the other side’s attorneys. Courts are not going to infer a fee promise into a contract unless it is unquestionably clear from the terms. It’s language-dependent.

Is Likely Not Enforceable Against You

So what does that mean for you in 2026? Your confession of judgment, probably signed some years ago, is likely not enforceable against you unless you’re a New Yorker. The rule from 2019 is the one applied by the First Department in 2025. There are two factors that determine whether it applies to you: where you live, and when the confession was filed. First, make sure you’re not a New York resident. Then see if a confession has been filed against you.

Even if the confession is inapplicable to you, that doesn’t put you out of reach of the debt. It doesn’t magically go away. The debt is still owed. Consider the case of Upfront Megatainment. There, the plaintiffs didn’t file the confession of judgment to pursue the debt. They pursued a “plenary action” to enforce the settlement agreement. Plenary action is just a fancy term for lawsuit. In other words, confession of judgment or not, you might have to fight a lawsuit.

The difference is the cost of the battle. As a general rule, you don’t have to pay New York lawyers fees if they sue you and prevail, unless it says so plainly in the contract, or unless that’s permitted by law or rule. In Upfront Megatainment, the language was tied to filing the confession, so once plaintiffs sued, the fees came off the table. If you’re behind on payments, get a copy of the agreement and confession you signed, and look to see what they say about fees, and how the creditor can enforce the agreement. And remember, a lawsuit begins not with the filing of a complaint, but with the execution of the contract.