What is a confession of judgment in plain language?

A confession of judgment (COJ) is a document the merchant signs at the start of an MCA that pre-acknowledges a debt and gives the funder permission to enter judgment against the merchant in court without any lawsuit, notice, or hearing. If the merchant defaults, the funder takes the pre-signed COJ to a court clerk and walks out with an enforceable judgment the same day.

Are MCA confessions of judgment still legal in 2026?

It depends on the state and the parties. New York banned COJ enforcement against out-of-state defendants in 2019 — the single biggest reform in the space. About a dozen other states have restricted or prohibited COJs by statute or case law. Several states still permit them, and many MCA contracts use choice-of-law and choice-of-forum clauses to route to friendly jurisdictions.

If my contract has a COJ but I live in a banned state, can the funder still use it?

Often not. The 2019 New York reform specifically blocked NY courts from honoring COJs against out-of-state defendants. Funders have responded by routing through other COJ-friendly jurisdictions (PA, MD historically) when their contracts allow. The enforceability question is fact-specific — check the choice-of-law clause and consult a specialized MCA defense attorney before assuming you're protected.

Can I vacate a COJ judgment after it's been entered?

Yes, in many cases. Courts increasingly scrutinize COJs on grounds of procedural irregularity, ambiguous default triggers, unconscionable terms, and constitutional due-process challenges. A motion to vacate is expensive ($5K–$25K legal) but has succeeded in numerous published 2020–2025 cases.

Should I avoid any MCA contract with a COJ clause?

If you have any other realistic funding option, yes. The COJ shifts the risk-of-error dramatically toward the merchant. If you must take an MCA with a COJ, push hard for the funder to remove it (some will for tier-1 merchants) or insist on a choice-of-forum clause in your home state. Always have the contract reviewed by counsel before signing.

MCA confession of judgment — state-by-state rules and the 2026 enforcement map

The single most consequential clause in any MCA contract is the confession of judgment. Here is the 2026 state-by-state enforcement map, the impact of the 2019 New York reform, and exactly what to read in your contract before signing.

What a COJ does, mechanically

A confession of judgment is a standalone legal instrument signed at the start of the MCA relationship. It is a notarized affidavit, executed by the merchant and the personal guarantor, that states the merchant owes a specified amount to the funder and consents in advance to entry of judgment in that amount in a specified court if the funder later submits the COJ alleging default.

The COJ shortcuts the entire civil litigation process. There is no summons, no complaint, no answer period, no motion practice, no discovery, and no trial. The funder takes the signed COJ to a court clerk, files it with a sworn affidavit of default, and the clerk enters judgment. The merchant typically learns of the judgment when their bank account is frozen or when a sheriff's notice arrives at their home or business.

That structural speed is why MCA funders historically loved COJs and why merchant advocacy groups (and eventually New York's legislature) targeted them. The risk of an erroneous or coerced default declaration falls almost entirely on the merchant, with minimal procedural protection.

The 2019 New York reform — the inflection point

For decades, the standard MCA contract specified New York as the choice of forum, because New York's COJ procedure was the fastest and most COJ-friendly in the country. A funder based in Connecticut, lending to a merchant in Florida, would file the COJ in a NY county court and have judgment entered within days. The merchant then had to travel to New York to attempt to vacate the judgment.

In August 2019, New York amended CPLR § 3218 to limit the enforceability of COJs to defendants who are residents of New York State at the time the COJ is filed. Out-of-state defendants — the vast majority of MCA borrowers — became unreachable through NY COJ procedure overnight.

The impact was significant. Within 6 months, COJ filings in New York counties dropped by more than 80%. Several major MCA funders restructured their contracts to use Pennsylvania, Maryland, and Delaware as alternative forums, with mixed results because courts in those states began scrutinizing imported COJ practice. Other funders moved away from COJs entirely, relying instead on standard breach-of-contract litigation and arbitration clauses.

State-by-state COJ map, 2026

Below is the working 2026 map. Categories are: permitted (COJ procedure available for commercial debts with limited restrictions), restricted(COJ allowed but with significant statutory or judicial limits), and prohibited or unenforceable (COJ either statutorily banned or generally unenforceable in practice).

Prohibited or generally unenforceable

New York — COJ enforceable only against NY residents (CPLR § 3218, as amended 2019)
California — COJs unenforceable in consumer transactions; commercial enforceability sharply limited
Florida — Florida Statutes § 55.05 prohibits COJ practice in nearly all contexts
Texas — COJ practice abolished; cognovit notes generally unenforceable
Massachusetts — Prohibited by statute
Michigan — Prohibited for consumer debts; commercial requires specific procedural compliance often not met

Restricted or limited use

Illinois — Cognovit notes (functionally similar to COJs) permitted but enforceability narrowed by case law
Ohio — Cognovit notes permitted in commercial transactions with bold warning language requirements
Virginia — Permitted for commercial debts; recent case law tightening enforcement standards
New Jersey — Permitted but courts increasingly scrutinizing on procedural grounds

Generally permitted

Pennsylvania — Among the most COJ-friendly jurisdictions; common forum for post-NY-reform filings
Maryland — Permitted; popular alternative to NY for out-of-state filings
Delaware — Permitted in commercial transactions; corporate forum favorite
Connecticut — Permitted with procedural requirements

Important caveat: the choice-of-law and choice-of-forum clauses in MCA contracts attempt to override the merchant's home-state law by stipulating that the contract is governed by, and disputes are litigated in, a COJ-friendly state. Courts increasingly refuse to enforce these clauses when the merchant has no real connection to the chosen forum and the public policy of the merchant's home state would prohibit COJ enforcement. This is unsettled, fact-specific law — do not assume your home-state protection is automatic.

How to spot a COJ in your contract

The COJ is usually a separate document attached to (or referenced by) the main MCA agreement. Look for these signals:

A standalone notarized affidavit titled "Affidavit of Confession of Judgment," "Confession of Judgment," or "Cognovit" attached to the funding package.
Language in the main contract referring to the merchant having "executed" or "delivered" a COJ to be held in escrow by the funder's counsel.
A choice-of-law clause specifying NY, PA, MD, or another COJ-friendly state — paired with a choice-of-forum clause requiring litigation in that state.
A notary requirement in the signature package — COJs require notarization to be enforceable in most jurisdictions.

If your funder's package includes a COJ, you have three options: refuse to sign it (some funders will pull the COJ for tier-1 merchants), negotiate the choice-of-forum to your home state, or walk away. A handful of tier-1 funders (Credibly's A-paper, CFG on certain programs, others) do not require COJs at all — these should be your first call if you want to avoid the issue entirely.

What to do if a COJ has been filed against you

The single most important action is to immediately retain a specialized commercial litigation attorney with MCA experience. The window to file a motion to vacate is narrow — typically 30 days from learning of the judgment, sometimes less depending on jurisdiction. Common vacatur grounds that have succeeded post-2019:

Procedural defects — improperly notarized COJ, missing required warning language, defective service of post-judgment notices.
Ambiguous default trigger — when the COJ allows the funder to file "upon default" but the contract's default definitions are unclear.
Unconscionability — when the underlying MCA terms (factor rate, APR-equivalent, default fees) shock the conscience under state law.
Due-process challenges — federal constitutional arguments that pre-signed COJ procedure denies meaningful notice and hearing.
Misrepresentation in the affidavit — funder's affidavit of default overstating the balance or accelerating without proper notice.

The bigger picture for 2026 contract review

The COJ is one of three clauses that decide whether an MCA contract is recoverable from a default. The other two are the personal guarantee (almost always required, scope varies widely) and the reconciliation clause (whether and how daily ACH can be adjusted when revenue drops). A merchant evaluating an MCA contract in 2026 should read all three carefully — preferably with counsel — and treat the COJ presence as a first-order decision variable, not a fine-print formality.

Frequently asked questions

What is a confession of judgment in plain language?: A confession of judgment (COJ) is a document the merchant signs at the start of an MCA that pre-acknowledges a debt and gives the funder permission to enter judgment against the merchant in court without any lawsuit, notice, or hearing. If the merchant defaults, the funder takes the pre-signed COJ to a court clerk and walks out with an enforceable judgment the same day.
Are MCA confessions of judgment still legal in 2026?: It depends on the state and the parties. New York banned COJ enforcement against out-of-state defendants in 2019 — the single biggest reform in the space. About a dozen other states have restricted or prohibited COJs by statute or case law. Several states still permit them, and many MCA contracts use choice-of-law and choice-of-forum clauses to route to friendly jurisdictions.
If my contract has a COJ but I live in a banned state, can the funder still use it?: Often not. The 2019 New York reform specifically blocked NY courts from honoring COJs against out-of-state defendants. Funders have responded by routing through other COJ-friendly jurisdictions (PA, MD historically) when their contracts allow. The enforceability question is fact-specific — check the choice-of-law clause and consult a specialized MCA defense attorney before assuming you're protected.
Can I vacate a COJ judgment after it's been entered?: Yes, in many cases. Courts increasingly scrutinize COJs on grounds of procedural irregularity, ambiguous default triggers, unconscionable terms, and constitutional due-process challenges. A motion to vacate is expensive ($5K–$25K legal) but has succeeded in numerous published 2020–2025 cases.
Should I avoid any MCA contract with a COJ clause?: If you have any other realistic funding option, yes. The COJ shifts the risk-of-error dramatically toward the merchant. If you must take an MCA with a COJ, push hard for the funder to remove it (some will for tier-1 merchants) or insist on a choice-of-forum clause in your home state. Always have the contract reviewed by counsel before signing.