A 'confession of judgment' (also called a cognovit note but not to be confused with a consent judgment) is a document signed by a borrower that waives the right to due process if a debt is unpaid. The term "confession of judgment" or consent decree, means that the signer confesses and accepts the judgment (the decision of the court). This confession of judgment might also be a personal guarantee, in which the borrower pledges personal funds if the loan isn't repaid.


If you sign a confession of judgment, you are basically saying you automatically admit that you broke the contract. The penalty written into the contract can be imposed on you without any opportunity to tell your side or reach a compromise. It's like confessing you killed someone without getting a chance to have a trial.
Confessions of Judgment are Under State Law

'Confession of judgment' language is part of a loan agreement, specifically in a promissory note. This language is regulated by states. Not many states (including Florida) allow confession of judgment language, but New York, where the Tampa couple's loan company had its main office, does.

Some states allow confessions of judgment in limited areas; Pennsylvania, for example, allows confession of judgment clauses in commercial (business transactions). Sometimes the state law allows a period of time (30 days, for example) to allow the debtor to file motions and work out a repayment plan.

It’s Official, The Confession of Judgment Era is Over
June 19, 2019 | By: Sean Murray FEATURE STORY

COJ TombstoneThe New York State legislature passed a bill (S06395) late Thursday night that effectively eliminates Confessions of Judgment (COJ) in the small business finance industry.

The Senate voted in favor 61-1.
The Assembly voted in favor 83-43.

The new law which goes into effect immediately after Governor Andrew Cuomo signs it, prohibits anyone from filing a COJ against a party that does not reside in New York State. That means if a small business or individual resides in any state that isn’t New York, you cannot file a COJ against them in New York. This matters greatly because 99% of all COJs industry-wide were being filed in New York due to the incredible ease and speed that New York Courts offer to turn those into valid judgments.

Debtors that reside in New York can still be subjected to New York COJs.

A particular sensational story series published by Bloomberg Businessweek created the impetus to change how such New York judgments by confession might impact out-of-state residents. The names of the Bloomberg reporters are written into the Bill’s official memo in the footnotes, memorializing for all time how this law came to be.

Within the small business finance industry, the percentage of funders that required a Confession of Judgment as a condition of their financing was relatively small. And their usage has been limited since COJs were only first introduced as a potential risk mitigation tool on merchant cash advances five years ago in 2014. However, Bloomberg News estimated that COJs have resulted in more than $1 billion in collective judgments over the years, mostly against non-New York businesses.