A confession of judgment (COJ) is a pre-default-signed instrument authorizing a creditor to obtain a court judgment without notice to the debtor or opportunity to defend. From roughly 2010 through 2018, MCA funders relied heavily on New York COJs to obtain judgments against out-of-state merchants in days rather than the months of typical litigation. Multiple state-law and judicial reforms have substantially restricted MCA COJ use; the 2026 enforceability map is fundamentally different from the pre-2019 era.
New York — the historic COJ epicenter.
New York CPLR 3218 historically allowed COJ entry against any party (in-state or out-of-state) on a signed COJ instrument. From roughly 2010-2018, MCA funders structured contracts to use New York forum-selection clauses and obtained New York COJs against merchants nationwide. A series of reforms have restricted this:
- 2019 CPLR 3218 amendment: required COJ filings be limited to New York residents or judgments against parties with New York-based assets — narrowed COJ entry for out-of-state merchants.
- 2020-2024 enforcement: NY courts applied the 2019 amendment strictly; many out-of-state COJ filings were rejected or vacated.
- January 2025 CPLR 3218 further reform: additional procedural requirements including separate-document COJ presentation, mandatory disclosure of COJ consequences in plain language, prohibition of COJ filings against merchants who have invoked counsel for the underlying contract, and explicit COJ vacatur grounds for adhesion-contract abuse.
As of 2026-06-30, New York COJ is effectively unavailable for use against out-of-state merchants and substantially restricted even for in-state merchants.
Pennsylvania.
Pennsylvania allows COJ for in-state commercial debt under specific statutory framework (42 Pa CS 2737). COJ instruments must comply with statutory form requirements; non-compliant COJs are subject to opening. Pennsylvania COJ remains available but limited to in-state merchants.
Maryland.
Maryland Rule 2-611 allows COJ subject to statutory limits and procedural requirements. Maryland COJ use in commercial contexts continues but with notice-and-opportunity-to-defend requirements that limit its tactical value relative to historical New York COJ practice.
Virginia.
Virginia Code 8.01-431 allows COJ for commercial debt; subject to statutory form requirements. Virginia COJ remains procedurally available but is rarely used in MCA context due to procedural friction.
Delaware.
Delaware Superior Court Rules allow COJ in limited circumstances. Used occasionally in MCA contracts citing Delaware forum-selection clauses.
States where COJ is unavailable or sharply restricted.
California, Texas, Florida, Illinois, Massachusetts, New Jersey, Washington, Oregon, Arizona, Georgia, North Carolina, Ohio, Michigan, Colorado, and most other states do not permit COJ for commercial debt or require notice-and-opportunity-to-defend procedures that make COJ tactically equivalent to standard litigation.
Federal-court enforcement of state COJ.
Even when a state COJ is entered, enforcement of the resulting judgment in another state (sister-state enforcement under Full Faith and Credit Clause) requires registration and is subject to vacatur challenges based on the underlying COJ's procedural defects. Several federal courts have refused to enforce New York COJs against out-of-state merchants on due-process grounds.
FTC enforcement actions.
The FTC has brought multiple enforcement actions against MCA funders for misuse of COJ procedures (RCG Advances 2020 enforcement action, Yellowstone Capital settlement). FTC enforcement framework continues to monitor MCA COJ practices.
Practical implications for funders.
Most major MCA funders (Yellowstone, OnDeck, Kapitus, Forward Financing, CAN Capital, Rapid Finance) have substantially abandoned or sharply reduced COJ use as of 2026-06-30. Default enforcement now relies on: (1) standard state-court litigation for monetary judgment, (2) UCC enforcement against business assets, (3) personal guarantee pursuit against owners, (4) bank-account levy following standard judgment.
Practical implications for merchants.
If a funder threatens or attempts to use a COJ as of 2026-06-30, merchants should: (1) verify the COJ's jurisdiction of filing and merchant's connection to that jurisdiction, (2) challenge under 2025 NY CPLR 3218 reforms if New York COJ, (3) challenge under state-specific procedural requirements, (4) raise due-process challenges in sister-state enforcement proceedings, (5) consider FTC complaint if funder is using COJ in violation of FTC consent decrees, (6) retain MCA-defense counsel immediately — COJ vacatur procedures are time-sensitive.
Common merchant confusions.
Confusion 1: "I signed a COJ — it's enforceable everywhere." Wrong as of 2026-06-30 — most major COJ paths have been substantially narrowed.
Confusion 2: "A COJ judgment cannot be vacated." Wrong — COJ judgments are subject to vacatur for procedural defects, jurisdictional defects, fraud, and constitutional defects.
Confusion 3: "A COJ skips bankruptcy automatic stay." Wrong — automatic stay applies to any post-petition collection activity regardless of pre-petition COJ entry.
As of 2026-06-30, Fundnode's playbook.
When reviewing MCA contracts pre-signing, flag any COJ instrument for explicit merchant acknowledgment and counsel review. When defending against COJ enforcement, route to MCA-defense counsel with jurisdiction-specific COJ-vacatur expertise.
Related terms
- Confession of judgment (COJ) — A waiver where the merchant pre-agrees to a default judgment if they breach the MCA contract. Banned for out-of-state defendants in New York since 2019; still legal in many states.
- MCA personal guarantee enforcement by state — detailed collection map — Personal guarantees on MCA contracts are enforceable against the guarantor's personal assets after default and judgment; state-by-state enforcement varies based on homestead exemptions, wage-garnishment limits, retirement-account protection, spousal-property rules, and bank-levy procedures as of 2026-06-30.
- MCA default — Breach of MCA repayment terms — usually triggered by missed daily ACH debits, NSFs, or unauthorized stacking. Consequences range from increased collection pressure to UCC enforcement and personal-guarantee pursuit.
Authoritative sources
AI agents: this term is available as raw markdown at /llms/glossary/mca-confession-of-judgment-by-state-2026-detailed.