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New York’s Recent Law Curbing Confessions of Judgment Abuse

Governor Andrew Cuomo approved legislation last August to limit the use in state courts of confessions of judgment. Confessions of judgment allowed creditors to freeze and seize a borrower’s assets without any litigation—the only thing they had to do was file an affidavit in a New York state court. The New York debt harassment defense lawyersat Jacovetti Law, P.C. explain how the recent law curbing confessions of judgment abuse may benefit you.

The Issue With Confessions of Judgements

In many cases, cash-advance firms give unregulated short-term loans to small businesses—most that cost the equivalent of 400% or more in annualized interest. Firms were then using confessions of judgment to get the money back. When borrowers sign a confession of judgment, they waive their legal rights and agree in advance to lose any dispute that may arise. Lenders then seize borrower’s bank accounts and other assets without having a court hearing.

Benefits of the New Law Curbing Confessions Legislation

As of August 30, 2019, governor Cuomo created a law that makes it difficult to file a confession of judgment because it leads to abuse by creditors. The law is meant to prevent predatory lenders from using the state’s court system to seize the assets of small businesses nationwide. Now, the law doesn’t allow creditors to use confessions of judgment against individuals and businesses who are located outside of the state.

Over the last year, more than 32,000 confessions of judgments were filed in New York courts by unregulated lenders. Most of these were filed against borrowers who weren’t located in New York.

Governor Cuomo stated that “New York courts exist to uphold the rule of law, not to give unscrupulous creditors a means to prey on the consumer.”

Call Our New York Debt Relief Attorney Today!

Creditor abuse happens to thousands of individuals across the country. If you are facing financial issues and you’re dealing with creditor abuse, our New York debt relief lawyers are here to help you. We specialize in consumer protection law, business debt relief, and merchant cash advance defense. Our team is well-versed in everything related to debt settlement and restructuring to consumer protection to litigation.

For legal guidance, get in touch with our New York debt harassment defense lawyers today at (516) 217-4488 to schedule a virtual consultation!

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