Monthly Archives: September 2019

Indiana doesn’t look kindly upon cognovit notes, even though its neighbor, Ohio, routinely uses them. In fact, Indiana’s dislike of cognovit notes is demonstrated by the existence of an Indiana statute providing it’s a Class B misdemeanor to procure, retain possession of, or attempt to recover upon a promissory note with a cognovit provision in it. (see Indiana Code §34-54-4-1.) So, cognovit provisions aren’t just unenforceable in Indiana, they’re illegal. How can two states with a common border disagree so vastly about the legal attributes of the cognovit note?  To answer this, it’s important to understand what a cognovit note is. A cognovit provision is a legal device by which a debtor gives advance consent to a noteholder obtaining a judgment against him or her without prior notice or hearing.  A cognovit is essentially a confession of judgment included in a note. Should there be a default, the holder can obtain judgment without giving the debtor notice or a hearing. This allows the noteholder to obtain a judgment without the delays inherent in having to serve notice on the debtor or dealing with any defenses the debtor might throw up. This makes the process much smoother and quicker for the noteholder. But, what about the debtor? Doesn’t this fly in the face of constitutional due process? Indiana thinks so, although several states, not just Ohio, think cognovits are okay. The states who agree with Ohio and consider cognovit notes legal are: Delaware, Virginia, Pennsylvania, and Maryland. Why would any borrower agree to this? Simply because a…