Did you know that you can use confessions of judgment to bypass New York debt collection? Sometimes, you can even bypass litigation in other states using the New York confession of judgment.
Almost every state has its own version of a confession of judgment. While there may be another name for it, it accomplishes the same goal.
Your out-of-state or in-state customer signs the confession of judgment, agreeing to the amount of damages that they owe you. The customer or third party guarantor consents to you filing the judgment immediately or waiting until payment has not been made as promised.
Confessions of judgment is an extremely powerful tool and can accomplish so much.
It shows good faith by a customer who has delayed payment but wishes to work things out. This agreement is great for clients who can negotiate an “amicable” pay arrangement with their customers. The customer understands that something must be in writing to protect the creditor and insure that they make payment as promised.
Let’s say the client is reasonably satisfied with the terms of repayment offered by the customer but requires some protection. If they seek a solution that will not necessitate time and money spent on debt collection litigation, they should insist that their client sign a confession of judgment. A confession of judgment is a way to circumvent normal court proceedings and avoid a lengthy legal process to resolve a dispute. Signing a confession of judgment also forfeits any of the defendant’s rights to dispute a claim in the future.
You can find the requirements of a confession of judgment in an earlier blog.
Let’s look at two examples of how clients use confessions of judgment.
A client is shipping product to its customer. The customer is a bit iffy as to whether it can pay the debt when due in April 2018. The client has the out-of-state (Arizona) customer sign the confession of judgment. Then if the client doesn’t receive payment, we can file the confession of judgment and restrain monies from the non-paying customer’s customer. We don’t have to wait for expensive, time-consuming litigation.
Let’s cite another example in which our client seeks to collect an unpaid balance. The customer wanted to avoid litigation and a black mark on their credit. So, the customer agreed to execute a confession of judgment. We don’t file the confession of judgment until or unless the customer fails to make payment(s) as agreed. If they make payment, then we return the confession of judgment to the customer or we destroy it.
What if your customer is out of state? By agreeing to execute a confession of judgment in New York state, you already have permission to enter judgment. You can then take that judgment and have it enforced in the debtor’s state or country. Of course, that state or country must recognize the New York confession of judgment.
Note that New York does not recognize foreign, out-of-state consent judgments unless there was agreement on the judgment after the inception of a lawsuit. That is why it is so very important for your client to sign the confession of judgment for filing in New York state.
If you would like to explore this debt collection option further, please get in touch with us to review your options.