Confession of judgment in New York after 2019

A confession of judgment lets a funder get a court judgment against you without suing you first. For years, many out-of-state businesses learned they had one only when their bank account was frozen. New York changed that in 2019. The change is real, but it is narrower than many people think.

What it is

A confession of judgment (COJ) is a statement you sign when you take the advance. It says that if you default, you agree the funder may have a judgment against you for the amount it claims is owed. There is no trial and no chance to argue first. A judgment lets a creditor freeze and take money and other assets, and it is hard to contest after the fact.

What changed in 2019

Before 2019, New York courts accepted these filings from creditors anywhere, in many counties, even against borrowers who had never been to New York. News coverage at the time reported more than 32,000 filings, most of them against borrowers outside the state. A bill sponsored by Senator Hoylman and Assemblyman Dinowitz was signed into law on August 30, 2019.

What the law says now

The current rule, CPLR 3218, in plain English:

• The paperwork must state the county where the person who signed lives.
• It can be filed only in the clerk's office of that county, or the county where the person lives when it is filed.
• It must be filed within three years of the signing.
• For a business, the law treats it as living in any county where it has a place of business.

The result: a business that has no place of business in New York generally cannot be hit with a confession of judgment filed in a New York court. A business that does operate in New York still can be, and so can an owner or guarantor who lives there.

What it does not mean

• It does not mean the debt is gone. The funder can still sue you the ordinary way, in a court that has jurisdiction.
• Other states differ. A funder may try to file somewhere else. Rules about confessions of judgment vary by state.
• It may not undo a judgment already entered. What happens to older judgments depends on the facts and the court. A lawyer can tell you.
• It does not change your guaranty. If an owner signed a guaranty, that is a separate document with its own terms.

What to check in your agreement

1. Search the agreement and every attachment for "confession of judgment", "affidavit of confession" and "judgment by confession".
2. Note the county named for filing, the state's law that governs, and whether a guarantor also signed one.
3. Ask whether your business, or any owner who signed, has a place of business or home in New York.
4. Keep the date you signed. The three-year window runs from it.

If one is filed

Act the same day. A notice from a bank, a marshal or a court clerk may mean your account is frozen. Gather the documents you signed and the notice, and talk to a lawyer licensed in the state where the judgment was entered. Do not move money around to avoid a freeze, and do not ignore the paperwork. See When you can't make the payment for what to do first when the situation is already serious.

Sources

• New York State Senate: Hoylman and Dinowitz legislation to close the loophole on confessions of judgment, signed Aug. 30, 2019 (S6395 / A7500A)
• N.Y. Civil Practice Law and Rules 3218 (current text)
• Bloomberg, "Cuomo Signs Bill Cracking Down on Small-Business-Loan Abuses," Aug. 30, 2019 (reports 32,000+ filings, mostly against borrowers outside New York)

General information as of October 2026. This guide does not describe the rules of any state other than New York, and courts apply the 2019 change to individual cases in different ways. If you have signed a confession of judgment, talk to a lawyer.

Education only, not legal advice. Agreements differ; your contract's exact wording controls.