Let’s say someone wronged you, and you’ve been going back and forth with them for months in an attempt to resolve things. You’ve finally agreed to settlement terms, but you aren’t sure you trust the person who stiffed you in the first place to comply. To help with this, your lawyer is recommending you have them sign a Confession of Judgment, and the other side has agreed to do so. What is a Confession of Judgment, and how does it put you in a better position?
First off, a Confession of Judgment is a signed confession of a legal obligation that can be filed with and enforced by a court without having to go through a trial. It’s authorized in New York by NY CPLR §3218. Put simply, someone who signs a Confession of Judgment is admitting to the court (and to you) that they owe you something. You can predetermine a number either based on the actual damages caused or, in some cases, a larger sum of money (known as liquidated damages) when the harm isn’t an obvious dollar amount. You can then take the confession to the county clerk and have it filed and enforced by the court in the event the opposing party doesn’t perform. It’s an easy process if there are no mistakes, but be wary – something as minor as a misspelled name can hold up the process.
Unfortunately, you can’t simply walk the signed Confession of Judgment over to the court and call it a day. In New York, you’ll need a few extra documents – a proposed judgment for the clerk to sign, an affidavit from the plaintiff confirming the facts, and a bill of costs. The clerk may also deduct amounts already paid from the judgment if the debtor partially complied, so be aware of that before you file the paperwork. Oftentimes the clerk will also ask for additional information, such as any written agreements that authorize the enforcement of the judgement in the event of a breach.
What civil situations might a Confession of Judgment make sense in? Oftentimes they are used as part of a Settlement Agreement. For example, let’s say someone owes you $10,000 and didn’t pay you. You have them agree to a payment plan for the amount they owed you and you both sign a settlement, but you also have them sign a Confession of Judgment in the amount of $15,000. If they breach the settlement and don’t pay the $10,000, you can enforce the $15,000 judgment. However, keep in mind that in New York the clerk will typically deduct anything that’s already been paid. So if the other side paid you $5,000, the most you’ll likely see is $10,000. Still, you come out on top. This acts as a great deterrent against non-payment – no one wants to be forced to pay more than they actually owed, especially if all they had to do was follow the rules. Keep in mind that there’s a timeline involved -although you must file the Confession of Judgment within three years of its execution, you don’t have to wait until the person reneges on the settlement to take care of the administrative side. However, the clerk will not enforce the Judgment until that breach occurs.
As you’d probably expect, filing a signed Confession of Judgment is only half the battle. Collecting on the judgment and getting your cash is another matter entirely – we’ll cover that in Part 2.