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Vacating Confession of Judgment

Chicago Attorneys for Vacating Confessions of Judgment

How does a debtor open a confession of judgment in Illinois?

Imagine you own a real estate development company building a shopping mall in the Chicago metropolitan area.  Your company borrowed $5 million to improve a strip mall.  The company signed a promissory note and the bank had you sign a guaranty.

Your timing could not have been worse; the real estate market collapsed shortly after construction finished.  The “anchor” tenant filed for bankruptcy and disaffirmed its lease, leaving the mall half-empty and unable to service the debt. The developer seeks new tenants, but the mall remains less than 50% occupied, and the debt exceeds the value of the realty.

The bank declares a default and accelerates the debt.  The bank instructs its lawyer to hold off on foreclosure and to pursue a debt claim against the developer and guarantor.  The bank’s lawyer reviews the note and guaranty and sees a “confession-of-judgment” clause in each. Knowing you have substantial assets, the bank’s lawyer decides to seek a confession judgment.

The first you hear about the dispute is when your wife calls to tell you that your home mortgage payment just bounced.  Your private banker tells you all your business and personal accounts are frozen, including the $125,000 in your personal and business accounts, and your entire $3.5 million securities portfolio.  If you think this type of seizure without notice and a hearing is unfair, and even un­-American, you’re right!

How to vacate a confession of judgment in Illinois

The Illinois Code of Civ.Pro. Section 2-1301(c) allows any debtor to walk into court, confess what he owes and ask the court to render a judgment in that amount. A confession of judgment clause in a contract allows the lender to speak in court as agent for the debtor. In other words, the person claiming that you owe money gets to testify on your behalf! At that point, the matter of the debt is closed. But can it be reopened?

Supreme Court Rule 276 provides a way. The original debtor may enter a motion:

  • Supported by affidavit
  • Accompanied by a verified answer

The debtor’s affidavit and answer must show a prima facie defense on the merits. If it looks to the court “at first glance” that the debtor could be right about whether a default has occurred, the court will open the judgment by confession. At that point the debtor can defend the case like any other lawsuit.

The key to getting your confession judgment opened is to retain an attorney experienced in confession of judgment litigation who knows what the court looks for in determining a prima facie case. Our attorneys have more than 50 years of commercial litigation experience; Andy Schwartz is a recognized authority on issues surrounding confessions of judgment.

To unwind a confession judgment in Illinois, talk to Schwartz Law Group, LLC

Schwartz Law Group, LLC is a leading law firm in confession of judgment litigation. We’re highly motivated to protect innocent borrowers from predatory lender practices. If you’ve fallen victim to a confession judgment, call today at 312-436-1442 or contact our firm online to schedule a consultation.

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