Last week, the Appellate Division held, in the case of Midland Funding LLC v. Giambanco, that a consent judgment that contains clear language that a debtor has made a “knowing and informed” waiver of notice for wage execution does not violate any statute, rule or public policy. The Appellate Division went further to advise the trial judges that they may not unilaterally alter a parties’ consent judgment to comply with a statute or rule or to benefit either party. If a certain provision in a consent judgment is found not to comply with a statute or rule, the Court should reject the form consent judgment and return the case to the parties.
In this particular case, Giambanco (the “Debtor”) owed money on her credit card to creditor Midland Funding LLC. Midland Funding filed a complaint against the Debtor. The Debtor and Midland Funding reached a settlement, which was memorialized in the form of a consent judgment. When the consent judgment was signed by the parties and forwarded to the trial judge for his signature, the trial judge removed that portion of the consent judgment which stated that if Debtor defaults on the terms of the consent judgment, that Midland Funding can immediately seek wage execution without further notice to the Debtor.
Midland Funding filed a motion to vacate the order, which was altered by the trial judge, and sought for its original provision permitting the wage execution without notice to be included in the consent judgment. The trial judge denied Midland Funding’s motion, holding that the Debtor may be prejudiced by not being notified of wage execution, and that such waiver was against public policy.
The Appellate Division agreed that the proposed form of language in the consent judgment did not clearly set forth that the Debtor was waiving her notice, and that such waiver was “knowing and informed” so as to comply with R. 4:59-1 and N.J.S.A. 2A:17-50(a). The Appellate Division stated, however, that if a trial court finds that a proposed consent judgment does not comply with statute or court rules, the trial court must reject the consent judgment, or return the case to its prior status. This case is important, particularly for attorneys, when drafting proposed forms of consent judgments.