What is a Confession of Judgment?

A Confession of Judgment (COJ) is a document the merchant signs at the time of the original MCA agreement consenting in advance to a court judgment in the funder's favor if they default. The funder can file the COJ with a court at any time after default and obtain a judgment immediately, without the merchant being notified or given a chance to defend.

Is COJ banned in New York?

Partially. New York's 2019 law (CPLR §3218) prohibits state courts from enforcing COJs against out-of-state defendants. So a NY-based funder can't use COJ against a Texas merchant in NY courts. But the COJ may still be enforceable in the merchant's home state. The federal court enforceability also varies. Many funders restructured agreements to remove or modify COJ clauses after 2019.

How fast can a COJ freeze my bank account?

Often within 24-72 hours of judgment entry. The funder files the COJ with a court (often without notice to you), the court enters judgment, and the funder serves the judgment on your bank. Your bank is required to freeze the account up to the judgment amount immediately. The first you may know is when your debit card is declined or payroll fails.

Can I challenge a COJ after the fact?

Yes, but it's expensive and slow. You can file a motion to vacate the judgment, typically on grounds of fraud, improper service, or lack of jurisdiction. This is litigation — expect 30-90 days minimum and significant attorney fees. During that period your accounts are still frozen. The practical advice: avoid signing contracts with COJ clauses where possible.

Which MCA funders still use COJ in 2026?

Less common than pre-2019 but still present. C-paper and stacking-focused funders use COJ more frequently than A-paper funders. Most direct A-paper funders (Credibly, OnDeck, Bluevine, Forward Financing) have moved away from COJ as standard. Broker-placed C-paper deals often still include them. Always read sections labeled 'Confession of Judgment', 'Stipulated Judgment', or 'Affidavit of Judgment'.

Can a COJ be enforced against me even if I'm not the business?

If you signed a personal guarantee and a separate COJ as guarantor, yes. The COJ applies to whoever signed it. Some funder agreements have one COJ executed by both the business and the guarantor individually — this means both can be enforced separately. Read carefully who signed what.

MCA Confession of Judgment (COJ): What It Is, How to Spot It, Which States Ban It

A COJ lets a funder freeze your bank account within days of default — without you knowing it's happening until your debit card is declined. New York banned COJ for out-of-state defendants in 2019. Here's how to identify it, where it's still common, and what to negotiate.

What a COJ actually does

A Confession of Judgment is a notarized document you sign at the time of the MCA agreement stating that if you default, you consent in advance to a court entering judgment against you for a specific amount — without notice, without a hearing, and without the chance to present a defense.

From the funder's perspective, this collapses what would normally be months of litigation into days. They walk into court with the signed COJ, file it, and the judgment is entered the same day. Your bank receives the judgment shortly after, and is required to freeze your accounts.

The typical contract language

Anonymized aggregate of COJ language we've seen:

"Merchant and Guarantor irrevocably authorize any attorney of record in any court of record in any State of the United States to appear for and confess judgment against Merchant and Guarantor in favor of Funder for the Purchased Amount and any unpaid balance, plus interest, fees, costs of collection, and reasonable attorney's fees, without process. Merchant and Guarantor waive all rights to notice, hearing, and defense."

The phrase "without process" is the operative one. It means no service, no summons, no chance to respond before judgment is entered.

The New York 2019 reform (CPLR §3218)

The 2018 Bloomberg investigation into COJ abuse by MCA funders triggered the New York legislature to amend CPLR §3218 in 2019. The change: New York state courts can no longer enforce COJ documents against defendants located outside New York.

This was significant because pre-2019, many MCA funders required signing a COJ in New York regardless of merchant location. The implicit threat — file in NY courts, freeze accounts before the merchant could even hire an attorney — was the entire enforcement model for some C-paper funders.

What changed in practice:

Several MCA funders shifted COJ filings to other states (Pennsylvania, Maryland, Delaware) where the rules were friendlier.
Many direct A-paper funders moved away from requiring COJ entirely, finding the reputational risk wasn't worth the enforcement edge.
C-paper and broker-placed deals still include COJ frequently, often in state-of-merchant filing rather than NY.

How fast a COJ enforcement actually moves

Typical timeline once a merchant defaults on an MCA with a COJ clause:

Day 0: First missed ACH debit. Funder collections contacts you, asks for payment.
Day 1-7: Funder waits for resolution. If you respond and arrange a cure, COJ usually isn't filed.
Day 7-15: If no resolution and pattern of missed ACH continues, funder files the COJ with court. Most commonly in the state specified in the contract.
Day 15-20: Court enters judgment. Funder receives certified copy.
Day 16-25: Funder serves judgment on your bank. Bank freezes accounts up to judgment amount. This is when you typically find out.
Day 25-60: If you don't file motion to vacate, judgment becomes final. Garnishment, lien filings on personal property follow.

From your perspective: account frozen in 3 weeks, with no warning and no chance to defend. This is what makes COJ uniquely dangerous compared to ordinary commercial litigation.

How to spot a COJ clause in your contract

Search the contract for these section headers or phrases:

"Confession of Judgment"
"Stipulated Judgment"
"Cognovit Note"
"Warrant of Attorney"
"Affidavit of Judgment"
"Consent to Judgment"

Also look for a separate notarized document attached to the agreement, often titled "Affidavit" or "Statement of Confession" that you're asked to sign with notary. This is the COJ in document form.

If you see any of these, the contract includes a COJ. The question becomes: is the enforcement venue and state where you actually want it filed if there's ever a problem?

States where COJ enforcement is restricted

State	COJ status (2026)
New York	Banned for out-of-state defendants (CPLR §3218, 2019)
California	Significantly restricted; requires merchant's independent attorney signature
Florida	Limited; specific procedural requirements before entry
Massachusetts	Highly restricted in commercial context
Pennsylvania	Enforceable but with specific notice requirements
Maryland	Enforceable; common COJ filing venue post-2019 NY ban
Delaware	Enforceable; commonly used in commercial contracts
Texas	Enforceable but with strong homestead protections limiting recovery

What you can negotiate

Removing a COJ from a contract is rarely successful with the funders that require them — the COJ is core to their underwriting model. What sometimes works:

Walk away. If the funder requires COJ, look for a different funder. Direct A-paper funders (Credibly, OnDeck, Bluevine, Forward Financing) generally don't require them. Yes, your factor rate may be higher; the contract risk is much lower.
Limit the COJ amount. Some funders agree to limit the COJ to a specific dollar amount or percentage of remaining balance, not the full original purchased amount.
Notice provision. Negotiate a contractual notice requirement (e.g., 30-day cure period before COJ filing). This doesn't change the legal mechanism but adds breach-of-contract exposure for the funder if violated.
State of filing. Some funders flex on which state the COJ is filed in. If you can move it to a state with stronger merchant protections (CA, NY for NY defendants, MA), you have more defensive options.

What to do if you signed a contract with a COJ and you're in trouble

Contact a specialty MCA defense attorney immediately. Not a general commercial attorney — someone specifically familiar with MCA contract enforcement.
Don't make partial payments without legal advice. Partial payments can reset default timing or be characterized as acknowledgment of debt, complicating defenses.
Move operating cash out of accounts tied to the funder. If the COJ is filed and judgment served, only accounts at the noticed bank get frozen initially. This isn't fraud — it's defensive cash management. Talk to your attorney about specific timing.
Consider personal bankruptcy if the situation is truly distressed. An automatic stay upon Chapter 7 or 13 filing halts COJ enforcement immediately. This is a consequential decision; consult a bankruptcy attorney.

Frequently asked questions

What is a Confession of Judgment?: A Confession of Judgment (COJ) is a document the merchant signs at the time of the original MCA agreement consenting in advance to a court judgment in the funder's favor if they default. The funder can file the COJ with a court at any time after default and obtain a judgment immediately, without the merchant being notified or given a chance to defend.
Is COJ banned in New York?: Partially. New York's 2019 law (CPLR §3218) prohibits state courts from enforcing COJs against out-of-state defendants. So a NY-based funder can't use COJ against a Texas merchant in NY courts. But the COJ may still be enforceable in the merchant's home state. The federal court enforceability also varies. Many funders restructured agreements to remove or modify COJ clauses after 2019.
How fast can a COJ freeze my bank account?: Often within 24-72 hours of judgment entry. The funder files the COJ with a court (often without notice to you), the court enters judgment, and the funder serves the judgment on your bank. Your bank is required to freeze the account up to the judgment amount immediately. The first you may know is when your debit card is declined or payroll fails.
Can I challenge a COJ after the fact?: Yes, but it's expensive and slow. You can file a motion to vacate the judgment, typically on grounds of fraud, improper service, or lack of jurisdiction. This is litigation — expect 30-90 days minimum and significant attorney fees. During that period your accounts are still frozen. The practical advice: avoid signing contracts with COJ clauses where possible.
Which MCA funders still use COJ in 2026?: Less common than pre-2019 but still present. C-paper and stacking-focused funders use COJ more frequently than A-paper funders. Most direct A-paper funders (Credibly, OnDeck, Bluevine, Forward Financing) have moved away from COJ as standard. Broker-placed C-paper deals often still include them. Always read sections labeled 'Confession of Judgment', 'Stipulated Judgment', or 'Affidavit of Judgment'.
Can a COJ be enforced against me even if I'm not the business?: If you signed a personal guarantee and a separate COJ as guarantor, yes. The COJ applies to whoever signed it. Some funder agreements have one COJ executed by both the business and the guarantor individually — this means both can be enforced separately. Read carefully who signed what.

Confession of Judgment (COJ) — the most consequential MCA clause.