New York State Senator Introduces Bill to Ban Confessions of Judgment From Financial Contracts

New York State Senator James Sanders Jr. has joined his colleagues in the Assembly and put forth a bill to ban Confessions of Judgment (COJs) in financial service and financial product contracts. The bill’s intent is to protect small businesses.

S.3851 is similar in language to assembly bill A.3636 introduced by Assemblymembers Yuh-Line Niou and Crystal Peoples-Stokes.

A confession of judgment is a legal document that allows a party to obtain a judgment without the need to bring a lawsuit. The legal tool recently came under fire after an investigative reporting series on their usage was published by Bloomberg Businessweek. Since then, several County Clerks, including Erie County’s Michael Kearns, have refused to file any that originate outside of their county.

Governor Cuomo has also voiced support for a bill banning COJs. In his Justice Agenda, Cuomo proposes a prohibition on COJs in small business loans under $250,000 and to “stop lenders from exploiting New York courts for nationwide collections by requiring that any permissible confession of judgment enforced in New York courts have a nexus to business activity in New York.”

Sanders’ bill is currently being reviewed by the Consumer Protection Committee.