A confessed judgment can have serious consequences for individuals and businesses in Maryland.  If you are facing a confessed judgment, it is important to act quickly to understand your legal rights and options with an experienced confessed judgment lawyer.  The name “confessed judgment” comes from the fact that the creditor does not have to prove the amount of the judgment because the debtor has already “confessed,” or agreed to, the amount in the event of default.

A confessed judgment is a powerful tool for creditors that provides a significant advantage, as they can quickly obtain a judgment and begin collection efforts, such as garnishing wages or seizing assets.  However, it is not always easy or simple to collect, as the debtor has the ability to use the law to fight back in various ways.  As discussed below, Maryland does not allow confessed judgments in consumer contracts, which means it is illegal to enforce one against a consumer in a contract such as a personal loan, title loan, apartment lease, car loan or other personal financial transaction. 

It is important to understand that just because a confessed judgment clause is in a contract, there is still much legal maneuvering that can be done to either enforce it or fight it.  Whitney, LLP has experience representing clients in Maryland confessed judgments.

This blog post will explain what a confessed judgment is, how to vacate a confessed judgment and how it can be enforced.

Whitney, LLP’s confessed judgement lawyers have experience representing clients in Maryland confessed judgment claims.  Contact us for a consultation at 410 583 8000, or use our Quick Contact Form.

What is a Confessed Judgment?

A confessed judgment is a legal agreement where a debtor (the borrower) agrees in advance to allow a creditor (the lender) to obtain a judgment against the debtor, if the debtor defaults under the contract, without going through the normal, time-consuming and expensive court process including serving them and proving the amount of damages. This agreement is usually included as a clause or agreement within the loan agreement, lease or other contract.

Confessed Judgment Clause in the Contract

• Clause included in the contract – When a contract is signed, the confessed judgment clause is incorporated into the contract.  The confessed judgment clause gives the creditor the power to quickly obtain a judgment against them if they default on the debt.
• If/When the borrower defaults, the creditor files the signed confession of judgment with the court.
• The court enters the judgment against the debtor, as long as the court approves the filing.

However, just because a judgment has been entered does not mean the creditor can automatically collect the money.  Many issues may still arise, and legal arguments can be made to address the issues.

How to Fight a Confessed Judgment

After a court enters the judgment, there are legal arguments the debtor must promptly raise.  In Maryland, the debtor has 30 days to open, modify, or vacate the judgment.

To “open” a confessed judgment means to allow the case to proceed as a regular lawsuit, enabling the debtor to raise defenses and litigate the dispute like a normal lawsuit.  The creditor loses the benefit of not having to go through litigation and having already proven the amount of damages.

To “modify” a confessed judgment means to adjust the terms or amount of the judgment.  The creditor has the judgment, but on modified terms.

Vacating a Confessed Judgment

To vacate a confessed judgment means to cancel or set aside the judgment.  To do so requires the debtor to provide some reason why the judgment should not be enforced at all.

Arguments for vacating a confessed judgment can include:

• Lack of Notice: If you were not properly notified that a judgment was entered against you, you may have grounds to vacate it.
• Improper Execution: If the confession of judgment was not executed properly (e.g., not signed correctly), it may be invalid.
• Fraud or Misrepresentation: If the creditor obtained the confession of judgment through fraud or misrepresentation, the judgment can be vacated.
• Unconscionable Terms: If the terms of the underlying contract are grossly unfair or one-sided, the court may vacate the judgment.
• Payment or Satisfaction: If you have already paid the debt or satisfied the obligation, the judgment should be vacated.
• Legal Defense to the Underlying Debt: If you have another valid legal defense to the underlying debt (e.g. breach of contract, usury), the court may vacate the judgment to allow you to present your defense.

To vacate a confessed judgment, a confessed judgment lawyer will file a motion with the court, presenting evidence, and arguing the case before the court.

Whitney, LLP has experience representing clients in confessed judgment actions.

How is a Confessed Judgment Enforced?

Once a confessed judgment is entered by the court, and any challenge by the debtor is unsuccessful, it becomes a legally binding order. The creditor can then enforce the judgment and collect the debt.  Steps the confessed judgment lawyer or debt collection lawyer may take to collect include:

• Wage Garnishment: A portion of the debtor’s wages can be withheld and paid to the creditor.
• Bank Levy: Funds in the debtor’s bank accounts can be seized.
• Property Lien: A lien can be placed on the debtor’s real estate, preventing them from selling or refinancing the property until the judgment is paid.
• Asset Seizure: Other personal property owned by the debtor can be seized and sold to satisfy the debt.

Confessed Judgments Are Illegal In Consumer Transactions

Confessed judgments are illegal in consumer transactions, including but not limited to consumer loans, in Maryland.

However, some dishonest businesses still have confessed judgment clauses in their contracts and will try to enforce the illegal term.

If you are a consumer and a business is trying to enforce a Maryland confessed judgment against you, you can fight back and seek to recover compensation.

Maryland Law on Confessed Judgments

Confessed judgments in Maryland are governed by specific statutes and rules that outline their use, limitations, and procedures:

1. Maryland Rules of Civil Procedure: Maryland Rule 2-611 (for Circuit Courts) and Rule 3-611 (for District Courts) govern the procedure for confessed judgments.

2. Consumer Protection Act: As of 2020, the Maryland Court of Appeals ruled that the Consumer Protection Act prohibits all confessed judgment clauses in all consumer contracts.

3. Commercial Transactions: Confessed judgments are permitted in commercial transactions.

Daniel W. Whitney and Daniel W. Whitney, Jr. of Whitney, LLP

Whitney, LLP – Confessed Judgment Attorneys

If you are facing a confessed judgment in Maryland or need to enforce a confessed judgment in Maryland, Whitney, LLP’s confessed judgment attorneys can help you understand your rights and explore your legal options.

Contact us for a consultation at 410 583 8000, or use our Quick Contact Form.

We represent clients across Maryland, including Baltimore, Bel Air, Annapolis, Frederick, Bethesda, Rockville, Gaithersburg, Columbia, Towson, Bowie and Salisbury.