Prohibits the entry of a judgment by confession on amounts due from one or more individuals for personal, family, household, consumer or non-business purposes and on a debt incurred if the principal amount of such debt was less than $5,000,000.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A7545
SPONSOR: Lavine TITLE OF BILL:
An act to amend the civil practice law and rules, in relation to certain
judgments by confession
PURPOSE OR GENERAL IDEA OF BILL:
This bill closes a loophole for certain debts that allow for in-state
merchant cash advance businesses to receive judgments by confession
SUMMARY OF SPECIFIC PROVISIONS:
Section 1: Amends the opening paragraph of section 3218 of the civil
practice law to create a new exemption through subdivision (e).
Section 2: Adds subdivision (e) to 3218 to create exemptions from
confession of judgement for amounts due from individuals for personal,
family, consumer, households, investments or non-business purposes or
amounts less than $5 million.
JUSTIFICATION:
A confession of judgment is a written and signed statement, in the form
of an affidavit, in which a debtor admits liability and agrees to pay
the sum confessed as owed to the creditor pursuant to an agreement. A
confession of judgment is a legitimate tool that may facilitate commer-
cial transactions, resolve or avoid litigation, support collection of
moneys owed under an equitable distribution plan, or ensure that govern-
ment agencies can recover funds on behalf of victims. When the debtor
does not per form or pay according to the agreement, a confession may be
filed as a judgment with the county clerk, even in the absence of a
pending court action. Prior to 2019, creditors with no nexus to New York
were obtaining judgements against out-of-state debtors in New York
courts because NY had the most permissive confession of judgment stat-
utes in the nation. Chapter 214 of the laws of 2019 closed the out-of-
state pipeline of cases, but left a loophole that allowed New York busi-
nesses open to such judgements by New York courts. This bill closes that
loophole through codifying a federal rule to ban the use of confessions
of judgments on amounts due from individuals for family, household,
consumer, investment, or other non-business uses. The bill also bars
confessions of judgements on any debt less than $5 million. Confessions
of judgement are a useful tool for some consumer credit transactions,
but should be restricted for small dollar debt incurred by small busi-
nesses.
PRIOR LEGISLATIVE HISTORY:
2023-2024: S2406
FISCAL IMPLICATIONS:
No Cost to the State
EFFECTIVE DATE:
This act shall take effect immediately and apply to judgments by
confession entered upon affidavits filed on or after such effective
date.
STATE OF NEW YORK
________________________________________________________________________
7545
2025-2026 Regular Sessions
IN ASSEMBLY
April 1, 2025
___________
Introduced by M. of A. LAVINE -- read once and referred to the Committee
on Judiciary
AN ACT to amend the civil practice law and rules, in relation to certain
judgments by confession
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Subdivision (a) of section 3218 of the civil practice law
2 and rules, as amended by chapter 311 of the laws of 1963, paragraph 1 as
3 amended by chapter 831 of the laws of 2021, is amended to read as
4 follows:
5 (a) Affidavit of defendant. Except as provided in section thirty-two
6 hundred one of this article and subdivision (e) of this section, a judg-
7 ment by confession may be entered, without an action, either for money
8 due or to become due, or to secure the plaintiff against a contingent
9 liability [in] on behalf of the defendant, or both, upon an affidavit
10 executed by the defendant[;]:
11 1. stating the sum for which judgment may be entered, authorizing the
12 entry of judgment, and stating the county where the defendant resides
13 [and, if applicable, stating that the interest rate for consumer debt
14 pursuant to section five thousand four of this chapter applies];
15 2. if the judgment to be confessed is for money due or to become due,
16 stating concisely the facts out of which the debt arose and showing that
17 the sum confessed is justly due or to become due; and
18 3. if the judgment to be confessed is for the purpose of securing the
19 plaintiff against a contingent liability, stating concisely the facts
20 constituting the liability and showing that the sum confessed does not
21 exceed the amount of the liability.
22 § 2. Section 3218 of the civil practice law and rules is amended by
23 adding a new subdivision (e) to read as follows:
24 (e) Prohibition on certain judgments by confession. No judgment by
25 confession may be entered on:
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD05691-01-5
A. 7545 2
1 1. any amount due from one or more individuals for personal, family,
2 household, consumer, or other non-business purposes; or
3 2. any amount due on a debt incurred by any person for any purpose if
4 the principal amount of such debt was less than five million dollars at
5 the time the debt was incurred.
6 § 3. This act shall take effect immediately and apply to judgments by
7 confession entered upon affidavits filed on or after such effective
8 date.
