Legislation Created in Response to Creditors Using New York Laws to Freeze and Seize Borrowers' Assets While Making It Difficult for Borrowers to Contest Abusive Conduct by Creditors
Cuomo: "New York courts exist to uphold the rule of law, not to give unscrupulous creditors a means to prey on consumers. By closing this loophole, we are strengthening our state's legal system and helping to ensure both in-state and out-of-state borrowers will not fall victim to these opportunistic schemes."
Governor Andrew M. Cuomo today signed legislation (S.6395/A.7500A) closing the legal loophole that allows creditors to use New York courts to secure confessions of judgment and seize the assets of borrowers for cases where the borrower has no connection to New York. Prior to this new law, creditors were able to exploit New York laws to freeze and seize a borrower's assets by obtaining a judgment entered in a court far from where the contested agreement was executed, making it difficult for a borrower to legally contest the unfair penalty.
"New York courts exist to uphold the rule of law, not to give unscrupulous creditors a means to prey on consumers," Governor Cuomo said. "By closing this loophole, we are strengthening our state's legal system and helping to ensure both in-state and out-of-state borrowers will not fall victim to these opportunistic schemes."
Senator Brad Hoylman, Chair of the Senate Judiciary Committee, said, "Where there's a loophole, there's a bad actor willing to exploit it to make money, no matter the cost to ordinary Americans. 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. Today, with Governor Cuomo's signature on my legislation, we're closing New York's courts to their predatory tactics. I am grateful to the Governor, Senate Majority Leader Andrea Stewart-Cousins, Assembly Member Jeffrey Dinowitz, and the Office of Court Administration for their partnership on these essential reforms."
Assembly Member Jeffrey Dinowitz, Chair of the Assembly Judiciary Committee, said, "For too long, New York has been used as a property seizure mill for the entire country because of loopholes in our laws governing confessions of judgment. Thanks in no small part to a diligent journalist at Bloomberg News, we were able to identify and correct this problem so that our civil courts will be able to focus on protecting the rights of New Yorkers - not expediting corporate greed from around the country. Thank you to my Judiciary Committee counterpart, State Senator Brad Hoylman, and our Chief Administrative Judge for their partnership in this display of legislative responsiveness and to Governor Cuomo for signing our bill into law."