Consent Judgment Clauses
If commercial debt collection proceeds to litigation, it can become very expensive. In many cases, the cost of litigation exceeds the amount of the debt at issue. In general, it is important to try to collect a debt short of litigation. However, it can be difficult to do this and still abide by the statute of limitations. In many cases, it is possible to negotiate to with the debtor and get the debtor to agree in writing to a payment plan. You can use the threat of litigation to persuade the debtor to include a consent judgment clause in the written plan. At Klapper & Fass, our experienced New York commercial debt collections lawyers understand how to negotiate and draft solid consent judgment clauses with recalcitrant debtors. These clauses allow you to transform a default into an automatic judgment without the need for the time and expense of trial.Consent Judgment Clauses
The benefit of a consent judgment clause attached to a payment plan is that it can save you the expense of proceeding with litigation in the event that a debtor misses a payment or does not ultimately repay you. Often, debtors do not have enough income or assets to pay off a commercial debt immediately, but they are open to a payment plan. Unfortunately, even if they agree to a payment plan, they may not stick to it over the long term. A consent judgment clause allows you to pressure the debtor to stick with the plan.
The agreement that includes a consent judgment clause should include an acknowledgement of debt or an admission of liability, including consent to a particular court's judgment. Assuming that the consent judgment clause is part of an agreement related to a payment plan, the agreement should also include a payment schedule that specifies the payment amount, the date these payments should start being made, and the number of payments, as well as any interest that will also be paid. The agreement should specify the name and address of the creditor as the person or entity to be paid. The creditor should also note what the debtor gets after completing the payment plan, whether that is a stipulation of discontinuance, a general release, or a satisfaction of judgment.
The consent judgment clause usually goes into effect if there is a default in payment by the debtor after notice and an opportunity to cure. The language of the clause should include how the creditor can pursue the debt, usually by entering judgment for the remaining balance minus any payments that were made.
If the debtor defaults, the judgment may be entered in court, and you become a judgment creditor. You will not have to prove the debt because the debtor will have consented to judgment by the terms of the agreement. You can collect the judgment by placing a lien on the debtor's real estate so that the sheriff can levy and sell the real estate. Some creditors prefer to leave the lien against the property until the debtor transfers it so that the judgment is paid from the proceeds of closing. Other ways to enforce the judgment include wage garnishment and seizure of the debtor's bank account.Explore Your Options with a Commercial Debt Collections Lawyer in New York
Our New York commercial debt collections attorneys can help you negotiate and tailor a suitable payment plan by using a consent judgment clause. The litigation attorneys at Klapper & Fass maintain offices in White Plains and Manhattan, from which we serve the five boroughs of New York City as well as Rockland, Suffolk, Westchester, and Nassau Counties. Our lawyers also provide representation in Texas, New Jersey, Florida, Illinois, Michigan, California, and other states around the nation. Contact us at 914.287.6466 or use our online form to set up an appointment.