What's happening
This bill restricts the use of judgments by confession for certain loans and prohibits financial institutions from using marshals to enforce them.
Why it matters
Limits the use of confessions of judgment to business loans above $250,000, prohibiting their use for personal, family, household, consumer, or investment debts. protecting individuals and small borrowers from potentially abusive debt collection tactics.
Bars lenders from requiring a confession of judgment when a loan is originated or as a loan condition. , preventing borrowers from being forced to waive their rights preemptively when seeking credit.
Prevents creditors from obtaining confessions of judgment against out-of-state borrowers or businesses without a New York presence. , closing loopholes that previously allowed predatory enforcement against non-residents.
Prohibits financial institutions from using marshals to enforce judgments by confession in New York City. , potentially reducing aggressive enforcement methods and offering more consumer protection in collections.
Albany, before your first meeting.
Every bill that moved yesterday, summarized in a sentence and ranked by impact. The Albany Scorecard follows on Sundays.
Free. Unsubscribe in one click. Want alerts on specific bills? Create an account.
Who cares
Headline styles
Limit Debt Collection Judgments
Plain English, a few words. Used as the page title.
Sponsors
3 Co-sponsors
History
- Committed to rules
- Advanced to third reading
- 2nd report cal.
- 1st report cal.578
- Amend by restoring to original print 3851
- Referred to consumer protection
- Recommitted to rules
- Amended on third reading (t) 3851a
- Ordered to third reading cal.1684
- Committee discharged and committed to rules
- Referred to consumer protection
Companion bill
The same bill in the other chamber. A bill becomes law when one version passes both houses and the governor signs it, so either number can carry it.
Ban Confessions in Contracts
In Assembly Committee · Codes · Sponsor Yuh-Line Niou
Full text
2 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
3851
2019-2020 Regular Sessions
IN SENATE
February 20, 2019
Introduced by Sen. SANDERS -- read twice and ordered printed, and when printed to be committed to the Committee on Consumer Protection
AN ACT to amend the general business law, in relation to prohibiting the inclusion of a confession of judgment in a contract or agreement for a financial product or service
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. The general business law is amended by adding a new section 396-aaa to read as follows:
§ 396-aaa. Confession of judgment requirement for certain contracts; prohibition. 1. No person shall require a confession of judgment in any contract or agreement for a financial product or service.
2. As used in this section the following terms shall have the following meanings:
(a) "Financial product or service" shall mean any financial product or financial service offered or provided by any person regulated or required to be regulated by the superintendent of financial services pursuant to the banking law or the insurance law or any financial product or service offered or sold to consumers except financial products or services: (i) regulated under the exclusive jurisdiction of a federal agency or authority, (ii) regulated for the purpose of consumer or investor protection by any other state agency, state department or state public authority, or (iii) where rules or regulations promulgated by the superintendent of financial services on such financial product or service would be preempted by federal law.
(b) "Financial product or service regulated for the purpose of consumer or investor protection": (i) shall include (A) any product or service for which registration or licensing is required or for which the offeror or provider is required to be registered or licensed by state law, (B) any product or service as to which provisions for consumer or investor protection are specifically set forth for such product or service by
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD03324-01-9
S. 3851 2
state statute or regulation and (C) securities, commodities and real property subject to the provisions of article twenty-three-A of the general business law, and (ii) shall not include products or services solely subject to other general laws or regulations for the protection of consumers or investors.
§ 2. This act shall take effect on the ninetieth day after it shall have become a law.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the general business law, in relation to prohibiting the inclusion of a confession of judgment in a contract or agreement for a financial product or service
Purpose or general idea of bill
To prohibit "confessions of judgment" in any contract or agreement for a financial product or service.
Summary of provisions
Section 1 - Prohibits "confession of judgment" for any contract or agreement for 'a financial product or service. Subdivision (2) - Defines "financial product or service" and "financial product or service regu- lated for the purpose of consumer or investor protection"
Section (2) - provides for an effective date of ninety days after the bill becomes law.
Justification
A confession of judgment is a legal document that allows a party to obtain a judgment without the need to bring a lawsuit.
Confessions of judgment are frequently abused by lenders to circumvent legal court proceedings and claim, often without proof, that a debtor has failed to meet their payment obligations. This allowed creditors to legally seize assets of borrowers without a court proceeding, financial- ly ruining tens of thousands of small businesses, including some of whom did not default on their loans.
This bill will protect small businesses from predatory lenders that often offer loans and cash advances on the pre-condition that they sign a confession of judgment.
Prior legislative history
No prior legislative history.
Fiscal implications for state and local governments
No fiscal implications.
Effective date
: This act will take place on the ninetieth day after it becomes law.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.