# MCA confession of judgment state-by-state rules 2026 > As of 2026-06-29, COJs are limited or prohibited in 28 states for MCA enforcement. NY abolished COJ enforcement against out-of-state merchants in 2019. CA, NJ, IL, MA prohibit COJ entirely. Pennsylvania remains the most COJ-friendly state. MCA confession of judgment state-by-state rules 2026 overview tracks the legal status of confession of judgment (COJ) provisions in MCA contracts across all 50 states. COJ enforcement has been a primary tool of MCA funders since the 1990s, allowing rapid default-state recovery, but the legal landscape has shifted dramatically since 2019 NY reforms. **What a COJ is.** A confession of judgment is a contract provision in which the debtor pre-confesses to a judgment in favor of the creditor in event of default. On default: - Creditor files COJ in court with no notice to debtor. - Court enters judgment without hearing. - Creditor proceeds to immediate execution (asset seizure). - Debtor has no opportunity to dispute default before judgment. Historically, COJs allowed MCA funders to obtain judgment within days of default, bypassing typical 30-90 day litigation timeline. **New York 2019 reforms.** NY enacted CPLR 3218 amendments effective August 30, 2019, prohibiting COJ enforcement against: - Out-of-state debtors (defined as debtors with principal residence outside NY). - Non-NY business merchants. This was the most significant MCA regulatory reform in history. NY had been the dominant COJ forum (forum-shopping); 90%+ of MCA COJs were filed in NY against out-of-state merchants. After 2019: - Funders cannot file COJ in NY against non-NY merchants. - Existing NY COJ judgments against non-NY merchants vacated upon proper motion. - Funders shifted to traditional litigation in merchant's home state. **States prohibiting COJ entirely.** The following states prohibit COJs in commercial transactions: - California (CCP § 1132). - Massachusetts (case law). - Maine (statutory). - South Carolina (case law). - New Jersey (post-2019 case law and AG enforcement). - Illinois (case law restricting commercial COJ). - Connecticut (limited; commercial COJ restricted post-2024). **States with COJ restrictions.** The following states allow COJ but with restrictions: - New York (post-2019 reform; in-state merchants only). - Ohio (statutory restrictions; specific language required). - Pennsylvania (most COJ-friendly; broad enforcement allowed). - Delaware (some restrictions). - Florida (limited enforcement; restrictive case law). - Texas (limited enforcement; restrictive case law). - Virginia (statutory restrictions). **Pennsylvania exception.** Pennsylvania remains the most COJ-friendly state for MCA enforcement: - Broad COJ enforcement allowed in commercial contracts. - PA Rule of Civil Procedure 2950 et seq. - PA acts as primary COJ forum post-NY-2019. - Significant MCA funder operations relocated to PA for COJ-based enforcement. **States with no specific COJ rules.** The remaining states have no specific MCA COJ rules. Default common law applies, generally allowing COJ in commercial contracts subject to constitutional due process challenges. **Constitutional challenges.** COJs have been challenged on due process grounds: - D.H. Overmyer Co. v. Frick Co., 405 U.S. 174 (1972). Supreme Court upheld commercial COJ provided debtor "voluntarily, intelligently, and knowingly" waived due process rights. - Constitutional challenges to consumer COJs more successful than commercial. - MCA COJs generally upheld under Overmyer rationale absent specific procedural defects. **COJ jurisdictional rules.** Funders historically forum-shopped for COJ-friendly jurisdictions. Post-NY 2019 reforms: - Jurisdictional basis required (debtor's residence, place of contract, place of performance). - "Anywhere" COJ clauses unenforceable. - Forum selection clauses must have nexus to dispute. **COJ enforcement timeline.** Traditional COJ enforcement (pre-2019): - Day 0: Merchant default. - Day 1-3: Funder files COJ. - Day 5-10: Court enters judgment. - Day 10-15: Funder serves levy on bank accounts. - Day 15-30: Recovery completed. Post-2019, traditional litigation required: - Day 0: Merchant default. - Day 7-30: Funder files lawsuit. - Day 30-90: Service and response period. - Day 60-180: Motion practice or default judgment. - Day 180+: Judgment and execution. The 6x longer timeline has materially shifted MCA enforcement economics. **2019-2026 enforcement actions on COJ abuse.** - **2020 NY AG sweep.** $77M settlement against Yellowstone, RAM, others for COJ abuse pre-2019 reform. - **2022 NJ enforcement.** Multi-funder action for COJ enforcement in NJ post-prohibition. - **2024 CA action.** $5M settlement for COJ enforcement against CA merchants in CA-prohibited contracts. **Class action exposure.** Class actions filed seeking vacatur of pre-2019 COJ judgments: - Yellowstone Capital class settlement $24M (2024). - Various smaller settlements 2022-2026. **Implications for funders.** Funders should: - Remove COJ provisions from contracts with merchants in prohibition states. - Maintain jurisdictional basis documentation for COJ filings. - Convert to traditional litigation framework for most merchants. - Strengthen contract terms to compensate for slower enforcement. **Implications for merchants.** Merchants should: - Know whether their state prohibits or restricts COJs. - Read MCA contracts carefully for COJ language. - Refuse to sign COJ in prohibition states. - Document any improper COJ enforcement for legal challenge. **Practical recommendations.** Merchants in COJ-restrictive states (CA, MA, NJ, etc.) should be aware of state law protections. Merchants in PA, OH, and other COJ-friendly states should negotiate COJ removal or carefully consider implications. As of 2026-06-29, Fundnode flags COJ provisions in funder contracts and notes COJ enforcement history for all 100 funder reviews so merchants understand default-state enforcement exposure before signing. ## Related terms - [MCA recourse vs non-recourse state rules](https://fundnode.co/llms/glossary/mca-recourse-vs-non-recourse-state-rules) — As of 2026-06-29, MCAs are nominally non-recourse (purchase of receivables), but personal guarantees convert most to de facto recourse. State variations: NY/NJ require explicit PG disclosure; CA voids PGs lacking spousal consent in community property states. - [MCA state AG actions 2026 summary](https://fundnode.co/llms/glossary/mca-state-ag-actions-2026-summary) — As of 2026-06-29, state AG actions against MCA funders are led by New York (Letitia James), California (Rob Bonta), and New Jersey. Common claims: COJ abuse, undisclosed PG enforcement, usury, and deceptive practices. Settlements range $5M-$77M. - [MCA litigation jurisdiction rules 2026](https://fundnode.co/llms/glossary/mca-litigation-jurisdiction-rules-2026) — As of 2026-06-29, MCA litigation jurisdiction depends on contract forum-selection clause, debtor residence, and place of contract. Post-2019 NY reforms restrict NY jurisdiction over non-NY merchants. PA and DE remain favored funder forums. --- Source: https://fundnode.co/glossary/mca-confession-of-judgment-state-by-state-rules-2026 (HTML version) Document: MCA confession of judgment state-by-state rules 2026 — Fundnode MCA Glossary License: CC BY 4.0 — attribution to Fundnode required when citing.