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Confessed Judgments

A confessed judgment clause allows a creditor’s attorney to file an affidavit with the lawsuit and effectively confess, on behalf of the debtor, that the judgment is owed.

A confessed judgment clause allows a creditor’s attorney to file an affidavit with the lawsuit and effectively confess, on behalf of the debtor, that the judgment is owed. If filed correctly, the Court can immediately enter judgment against a debtor. Having a judgment entered means that a creditor can begin to collect on the judgment by garnishing bank accounts, wages, and other collection methods.

Confessed Judgments are governed by Maryland Rules 2-611 (in Circuit Court) and 3-611 (in District Court). A Confessed Judgment is not applicable to consumer loans or transactions. Some states, such as Virginia, also have confessed judgments but the procedures and rules are different state to state.

This procedure to obtain judgment with a confessed judgment is significantly abbreviated compared to the regular litigation process. Without a confessed judgment clause, a creditor would have to file a complaint for breach of contract, build its case through discovery, and either file a motion for summary judgment and/or go to trial.[1]

Once a Maryland court enters a confessed judgment, it must issue notice to the debtor of the confessed judgment and the notice must be served pursuant to Maryland Rule 3-121 (Circuit Court) or Rule 2-121 (District Court). This service is typically made by mailing the notice to the address of the debtor that the creditor lists on the complaint and affidavit.

The debtor has an opportunity to file a motion to open, modify, or vacate the confessed judgment typically within 30 days of service of the notice.[2] Skilled research and drafting of this motion can convince a judge that there is an actual controversy concerning the loan and if the motion to vacate is granted, the creditor will have to build its case without the abbreviated confessed judgment procedure. If granted, the creditor cannot receive a confessed judgment and the case can take several months or years in litigation. This amount of extra time before a creditor can collect can have a significant impact on the well-being on a debtor.

If you are entered into a consumer contract and it contains a confessed judgment clause on which a creditor is attempting to collect, there are remedies available to prevent collection efforts and to dismiss the lawsuit, and Steiner Law Group may be able to help you.

[1] This process can easily cost $25,000 in attorney’s fees if a debtor has a skilled attorney. If a loan amount is for a smaller dollar amount (for example, $10,000), it may not make economic sense for a creditor to pay for a typical lawsuit which may cost it more than it will recover.

[2] in District Court the period is a flat 30 days; in Circuit Court the period is the same time period as for filing an answer).

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