New York’s COJ Restrictions Have Been Signed Into Law

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Albany CapitolGovernor Cuomo has signed S6395, the law that outlaws entering a Confession of Judgment in New York against a non-New York debtor.

Rich Azzopardi, a senior advisor to the governor, said on social media that the law has “closed a loophole that allowed unscrupulous creditors to use NY courts to penalize out-of-state consumers with no ties to the state.” He congratulated Senators Brad Hoylman and Assembly Member Jeffrey Dinowitz for their work on the bill.

Senator Hoylman tweeted in response that “the entire business model of lenders who exploited New York’s court system and laws to prey on out-of-state small businesses through confessions of judgment was immoral.”

The Confession of Judgment ban is very specific, it prohibits the entering of a COJ in New York against a non-New York party. It does not prevent parties from filing lawsuits in New York. It does not prohibit COJs from being filed in other states. This law is significant because approximately 99% of COJs being utilized in the small business finance industry were being filed in New York regardless of where the debtor resided. That is because the New York Court system is the fastest and most efficient when it comes to entering COJs and securing a judgment.

The bill was drafted in response to a controversial story series published by Bloomberg reporters Zeke Faux and Zachary Mider that alleged abuses were taking place in the New York courts via COJs.

Last modified: August 30, 2019
Sean Murray


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