Confession of Judgment in MCA Contracts: How to Fight Back

A Confession of Judgment ("COJ") is a clause buried in many MCA contracts that lets the funder obtain a court judgment against you without notice if you default. Once entered, it can be used to freeze bank accounts, file liens, and garnish receivables — sometimes within 24 hours.

How MCA COJs work

You sign a notarized affidavit at the start of the advance admitting you owe the full purchase amount. If the funder claims default, they file the affidavit with a court clerk. There is no hearing. The judgment is issued.

The New York rule change

In 2019, New York amended CPLR § 3218 to bar COJs against non-New York debtors. Because most MCA funders are New York-based, this was a major shift. Many older COJs against out-of-state businesses are now vulnerable to being vacated.

How to vacate a COJ

The process depends on where it was filed, but the playbook is consistent:

1. Pull the entered judgment from the county clerk's docket.
2. Identify procedural defects — affidavit issues, jurisdictional problems, statute compliance.
3. File a motion to vacate under the applicable state's procedure (e.g., NY CPLR § 5015).
4. Negotiate in parallel — funders often settle rather than litigate vacatur.

If your accounts are already frozen

Time matters in hours, not days. The first call should be to counsel licensed where the COJ was entered. We coordinate emergency vacatur work with a national network of attorneys. Call us before you call the funder back.

Prevention

Before signing any MCA, scan for: a "Confession of Judgment" section, a separate notarized affidavit attached as an exhibit, and a New York jurisdiction clause. If any of those are present, negotiate them out or walk away.