Remembering TCPaul, 2016-2019

Using a confession of judgment for personal loan

I know this can be done in a business setting and NOT in a c demwave03/25/19
Interesting question. Many states do define a "consumer loan onehell03/25/19
I see your point. However if you lend your neighbor 25k, you demwave03/25/19
Ohh wow, debtors have due process rights! How inconvenient triplesix03/25/19
So the counterpoint to this is that it won't be a very drawn onehell03/25/19
I am a talking about lending 25k where there is a cancelled demwave03/25/19
Again, you just saying he has no defense does not mean he do onehell03/25/19
You lend someone 25k. Here is the copy of the cancelled chec demwave03/25/19
Are you a licensed Attorney? triplesix03/25/19
No, but he's a licensed Democrat. debtslave1503/25/19
Dude, I don't know what your deal is, but a cancelled check fettywap03/25/19
Along with a COJ, and a Loan Agreement it is! demwave03/25/19
r u asking why the bank takes your deposit and pays 1.25% in whiteguyinchina03/25/19
Not exactly but yeah. Why I am forced to lend to the bank at demwave03/25/19
I dunno. the real spread is like .75 you earn on checking in whiteguyinchina03/26/19
I work with Confessions of Judgment all the time in my pract mcacollector03/26/19
True but what if the debtors is out of state defendant? Now demwave03/26/19
I don't think you understand the concepts of credit underwri triplesix03/26/19
Seems to be looking for a way to reduce it, so probably does jeffm03/26/19
More like he failed to account for them and now looking to u triplesix03/26/19
I agree with the jurisdictions which refuse to enforce a COJ jeffm03/26/19
I agree with jeffm, it does sound unconscionable. My underst onehell03/26/19
Debtor received money. Debtor has not repaid money. These ar demwave03/26/19
"Debtor received money. Debtor has not repaid money. These a jeffm03/26/19
When you pay in full, especially if it is a significant amou demwave03/26/19
Don't know what else there is to say in this thread man. I d onehell03/26/19
Financial institutions protect themselves up the wazzou desp demwave03/26/19
Yes, get a collateral lol triplesix03/26/19
Yes. The individual can simply not make loans, or they can h onehell03/26/19

demwave (Mar 25, 2019 - 11:25 am)

I know this can be done in a business setting and NOT in a consumer setting. A personal loan is neither though or did I misunderstand?

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onehell (Mar 25, 2019 - 1:23 pm)

Interesting question. Many states do define a "consumer loan" as a loan made by someone who is regularly in the business of making loans to people for household/non-commercial purposes. But that definition is usually for licensure. Like, you don't want people to have to become licensed as some kind of financial institution just to make a one-off loan to help out their neighbor.

But in a true neighbor-to-neighbor "personal loan," all that really means is that the lender isn't regularly in the business of making loans and thus isn't licensed or regulated. It doesn't evidence the sort of sophisticated-party type of reasoning that is usually the basis for enforcing a confession of judgment provision in states that allow it. I mean, by all means give it a shot if there's nothing directly on-point against it, but I wouldn't bank on it flying. Even if you are in one of the states that theoretically allows it, I've never heard of it being enforced against unsophisticated "average joe" type defendants. After all, provisions like that purport to waive all defenses and even due process itself.

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demwave (Mar 25, 2019 - 2:39 pm)

I see your point. However if you lend your neighbor 25k, you will not want to file suit to recover in case of nonpayment with all the time restrictions, defenses, scheduling orders etc etc. All while your neighbor pays other creditors or hides assets. You should be able to summarily be able to recover. Rules like this do raise the cost of capital by forcing the neighbor to either scr*w his family over or pay an instituion to lend him the money.

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triplesix (Mar 25, 2019 - 2:41 pm)

Ohh wow, debtors have due process rights! How inconvenient

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onehell (Mar 25, 2019 - 3:21 pm)

So the counterpoint to this is that it won't be a very drawn out lawsuit if all is as you say.

If the debtor has no defense or counterclaim then he will either default or lose on dispositive motion, plus there will be fee-shifting if provided for by contract or statute. Not a reason to say he cannot even file an answer. A true "confession of judgment" is a provision that tries to say he can't raise any defenses, no matter how legitimate they may be. That presents real due process issues.

And yes, debtors sometimes hide assets. So what? That happens with or without a lawsuit, and post-judgment proceedings are precisely for tracking down assets. If the debt is unsecured, then it's exactly what it says it is: An unsecured debt, meaning the lender took on a certain amount of risk of nonpayment, bankruptcy, etc. etc. Even with a judgment, it's still a civil matter and not paying one's debts is no crime. The judgment, even once obtained, is not going to enforce itself. If they don't pay voluntarily, you'll either find something to garnish or you won't.

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demwave (Mar 25, 2019 - 3:32 pm)

I am a talking about lending 25k where there is a cancelled check to prove lending. There is a payback date 12 mos. later with non-usurious interest rate. There is no defense. With a COJ you can move fast and seize assets. Of course this may be disgorged in a bankruptcy situation but you know what I mean.

What you list above can still take 6 months from drafting complaint to filing it, then serving it waiting 20+ days for answer and on and on and on!

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onehell (Mar 25, 2019 - 3:37 pm)

Again, you just saying he has no defense does not mean he doesn't. If he really has no defense then that is what the court will find. If all is as you say then the judgment should be obtainable readily enough because the defendant will either default or his answer won't raise anything that can survive a motion for summary judgment.

But that said, courts don't look at cases and say "oh this is clear cut, there's no reason to serve it on the defendant or let him answer, I'll just enter judgment." Issuing a judgment without any opportunity to respond would mean the entire proceeding was done ex parte. That's not consistent with due process, usually isn't constitutional, and it's simply not how courts work. Besides, even if there is no dispute about liability there could be a genuine defense as to how you calculated the interest or something.

There is, in SOME states, allowances for confessions of judgment in certain big commercial cases with sophisticated parties and counsel on both sides who understood what they were agreeing to, but that is sounding less and less like this situation.

Finally, as to time. If you know he has the money and you know where it is you may be able to get some kind of a prejudgment writ just to keep him from disposing of stuff while case is pending. If available in your state it usually involves paying a substantial bond. It can be done in a lot of jurisdictions, but should not be attempted without counsel.

You should seriously retain a lawyer as it sounds like you are representing yourself which you really ought not to do if the amount at issue is above small claims court jurisdiction, which it sounds like it is.

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demwave (Mar 25, 2019 - 3:01 pm)

You lend someone 25k. Here is the copy of the cancelled check.Cant pay or wont pay. Or rather preferes to pay back other debts before yours.
Now You need to file a complaint and slug it for 2-3 years in a crowded urban docket all the while playing ping pong with his attorney....................sounds more like unjust enrichment than due process.

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triplesix (Mar 25, 2019 - 3:15 pm)

Are you a licensed Attorney?

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debtslave15 (Mar 25, 2019 - 4:44 pm)

No, but he's a licensed Democrat.

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fettywap (Mar 25, 2019 - 3:43 pm)

Dude, I don't know what your deal is, but a cancelled check alone is not evidence of a loan.

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demwave (Mar 25, 2019 - 3:48 pm)

Along with a COJ, and a Loan Agreement it is!

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whiteguyinchina (Mar 25, 2019 - 6:31 pm)

r u asking why the bank takes your deposit and pays 1.25% interest and lends to your friend at 7%, yet it's difficult if not illegal for you to just do the same?

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demwave (Mar 25, 2019 - 7:55 pm)

Not exactly but yeah. Why I am forced to lend to the bank at 1% when, if I could adequately protect myself with a COJ, I can lend to him at 3.75% and call it a day?

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whiteguyinchina (Mar 26, 2019 - 5:41 am)

I dunno. the real spread is like .75 you earn on checking interest and 18.75 charged on your neighbor's CC.

I dunno the answer but I am guessing it's in the 'public interest' yadda yadda.

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mcacollector (Mar 26, 2019 - 8:53 am)

I work with Confessions of Judgment all the time in my practice. They’re governed by state law, so I would check to make sure they are legal in your state. They operate as a waiver of notice requirements and are extremely convenient in debt collection. They are essentially a civil “guilty plea” wherein they basically state that if they default, you can file the COJ and get a judgment against them. It really isn’t as bad as people seem to think it is because you still have to file supporting documents evidencing the default. The debtor does have recourse to challenge the Judgment by Confession and may seek to have the judgment vacated by order to show cause.

Otherwise, what about a motion for summary judgment in lieu of complaint? Typically, (at least here in NY) that is used specifically for instruments for payment of money only (a loan). This basically works the same way as a COJ except they are served... might be useful in a state that doesn’t allow COJs.

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demwave (Mar 26, 2019 - 10:36 am)

True but what if the debtors is out of state defendant? Now you have to serve out of state, deal with possible removal to Federal Court, deal with potential motion to dismiss based on lack of personal jurisdiction yada yada yada! Not to say that this will happen but the mere threat of it happening can impose additional costs and delay.

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triplesix (Mar 26, 2019 - 11:51 am)

I don't think you understand the concepts of credit underwriting, risk, and risk premium.

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jeffm (Mar 26, 2019 - 11:54 am)

Seems to be looking for a way to reduce it, so probably does.

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triplesix (Mar 26, 2019 - 12:59 pm)

More like he failed to account for them and now looking to userp someone's dude process protections.

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jeffm (Mar 26, 2019 - 11:39 am)

I agree with the jurisdictions which refuse to enforce a COJ. The practice sounds unconscionable if there is no service of process requirement.

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onehell (Mar 26, 2019 - 12:30 pm)

I agree with jeffm, it does sound unconscionable. My understanding is that even the states that do recognize them will only do so with sophisticated parties, won't recognize them in contracts of adhesion, etc. And then even if you do get a judgment that way, you could run into problems domesticating it in another state too.

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demwave (Mar 26, 2019 - 12:26 pm)

Debtor received money. Debtor has not repaid money. These are given.
To collect should be as simple as 123!

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jeffm (Mar 26, 2019 - 12:33 pm)

"Debtor received money. Debtor has not repaid money. These are given."

No, they are not.

Defendant denies receiving money. Alternatively, defendant paid the debt in full.

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demwave (Mar 26, 2019 - 1:58 pm)

When you pay in full, especially if it is a significant amount, you get a statement of account or release to avoid this exact type of situation.
You never sign a COJ and then not get the money. These are done contemporaneously or just about. You can respond faster than the creditor can file the COJ and get a judgment again literally.

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onehell (Mar 26, 2019 - 3:12 pm)

Don't know what else there is to say in this thread man. I don't care how "clear cut" one side thinks the case is, notice and opportunity to be heard is at the absolute core of due process. If there really is no genuine dispute of material fact then the other side either won't respond or their defense won't survive summary judgment.

There's also another thing that is at the core of debt collection matters, which is that an unsecured debt is just that: Unsecured. It means the lender is taking the risk of ending up in a "can't squeeze blood from a stone" type of scenario. If you think they're hiding stuff, then you'll get a judgment after giving them proper due process and then subpoena them for a debtors examination. But there is simply no way to avoid the fundamental fact that debtors who get no security for a loan shoulder a certain level of risk in so doing.

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demwave (Mar 26, 2019 - 3:22 pm)

Financial institutions protect themselves up the wazzou despite having teams of lawyers to enforce collection and on top of this they get higher rates plus fees. Wait I thought the higher rates were to compensate for "higher risk"? In reality because of all the protection they have they should have lower rates not higher rates.
Cant a sophisticated individual, one that knows the law, protect himself better than just lending UNSECURED as you say? That is the whole point of this thread.

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triplesix (Mar 26, 2019 - 3:33 pm)

Yes, get a collateral lol

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onehell (Mar 26, 2019 - 3:37 pm)

Yes. The individual can simply not make loans, or they can hire counsel and take all the steps necessary to properly perfect a security interest in some asset of the debtor.

The big banks don't necessarily "protect themselves up the wazzou." For example, a credit card is an entirely unsecured debt. What they do is recognize that some people will default and some won't, and they price that risk into everyone's interest rate. They also check credit reports and such, and they have the approvals needed to report delinquencies to credit, and they sell the really bad debts to debt collectors who buy notes for pennies on the dollar.

The end result is that while they will have a certain allowance for bad debt in any portfolio of loans, the overall portfolio is profitable despite some defaults. But it order to have a portfolio of loans at all, you'd need to regularly make loans, and that typically makes you a consumer lender that needs a license.

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