The Law According to Moses: Cognovit Note? You Better Ask Somebody.
By Ambrose Moses, III
OhioMBE – April 1, 2014
A promissory note is a written promise to pay money that one person (the “maker”) gives to another (the “payee”). A cognovit note is a promissory note in which the maker acknowledges a debt with the understanding that, if the debt is not repaid, a court may enter a judgment against the maker without the usual notice or hearing.
Cognovit notes are legal in business contracts and can be extremely harsh and unfair. A cognovit is also called a “confession of judgment”. Such language is sometimes put into commercial lease agreements.
Traci resides in Cincinnati and owns a home-based mobile food-cart business. One of her hottest spots is in Dayton outside the courthouse.
Traci met a banker from JPuntington Bank. JPuntington Bank is based in Columbus but has offices in several other Ohio cities. She wants to upgrade her food-carts and calls the banker to get a loan from JPuntington Bank.
The banker offers to meet Traci in Dayton at the courthouse to sign “the papers”. Traci glances over the papers. The papers also include a promissory note with some language about “confession of judgment” and “warrant of attorney”.
Traci did not have an attorney and felt that she was smart enough to read and understand most of the documentation. She didn’t even call Small Business Legal Aid.
Traci thought that since she had gotten loans for her car and living room furniture, what more could there be to a loan to upgrade her food-carts? They meet. She signs. She receives a loan of $50,000.
A few years later, things happen and Traci is unable to keep up with the payments. The bank sues Traci in Columbus.
[Click Here1 to read more about Traci’s story.]
The bank files the lawsuit. On that same day, an attorney chosen by the bank files an Answer on behalf of Traci confessing judgment and agreeing with the bank’s complaint.
Needless to say, she is shocked. How could this happen? Why wasn’t she given notice before all of this took place? Isn’t there something called due process? [Click Here2 to read more about Traci’s story.]
For more information contact Ambrose Moses, III, an attorney with Moses Law Office. Email: info@MosesLaw.pro. Telephone: (614) 418-7898.
1 = http://bit.ly/1lyUPni
2 = http://bit.ly/1lyUPni2
