A confession of judgment allows a creditor to obtain judgment without litigation where the debtor has consented in advance. It is powerful, and heavily regulated.

Prohibited or restricted in many states, particularly in consumer transactions where they are banned outright by federal rule. Several states prohibit prospective confessions in commercial agreements as well, while others permit them with formalities.

Formalities where permitted commonly include a separate signed instrument, specific statutory warning language, an affidavit of the amount due, and filing within a limited period in a specified venue.

The settlement alternative. A stipulated judgment held in escrow and filed only on default is more widely enforceable. The settlement agreement should specify the default, a notice and cure period, the amount of the judgment including any credit for payments made, and the procedure for entry.

Enforceability across state lines. A judgment entered by confession may face resistance to recognition in a state whose public policy prohibits them, particularly where the debtor had no notice.

Practical drafting. Give a short cure period and require written notice. A judgment entered for a missed payment that the debtor could have cured in three days is the fact pattern that produces motions to vacate and sympathetic courts.