The full anatomy of a confession of judgment — and exactly how to vacate one

A Confession of Judgment is a contract you sign before you've lost — that lets the funder collect as if you have.

What a COJ actually is

A Confession of Judgment is a clause buried in most MCA contracts where the borrower agrees, in advance, to a judgment being entered against them — without ever appearing in court. The funder fills in the dollar amount, files the paperwork, and gets a court-stamped judgment in days, not months.

This is not a normal lawsuit. There is no complaint, no answer, no discovery. The first time most business owners learn a COJ exists is when their bank account is frozen on a Monday morning.

Where they come from

For two decades, New York County was the COJ capital of the country — funders from across the U.S. would file judgments in NYC because of how favorable the procedure was. That changed in 2019, when New York amended CPLR § 3218 to bar out-of-state COJs.

The funder ecosystem adapted by re-routing through other jurisdictions, restructuring affidavits, and relying on choice-of-law clauses to argue that COJs filed elsewhere should still be enforced. The result is a fragmented landscape where the validity of any given COJ depends on a half-dozen procedural questions most borrowers don't know to ask.

How enforcement actually works

Once a COJ is filed and a judgment entered, the funder can immediately:

• Issue a restraining notice on your operating bank account
• Levy any frozen funds with a marshal or sheriff
• Garnish receivables from your customers via information subpoenas
• Record the judgment as a lien on real property

The standard playbook is to freeze accounts on a Monday and let the cash flow damage compound through the week. By Friday, payroll has bounced and the borrower is making the call from a position of total leverage loss. This is the moment most settlements collapse — and the moment our standstill protocol exists for.

The procedural roadmap to vacate

Vacating a COJ is a two-step process: (1) get a temporary restraining order against further collection, and (2) move to vacate the judgment on procedural and substantive grounds. Done correctly, both can be filed within 72 hours of engagement.

• Order to Show Cause with TRO. Filed ex parte. Requests an immediate stay of enforcement pending the motion to vacate. Most judges grant this within 24-48 hours if the affidavit is properly supported.
• Motion to Vacate. Filed under CPLR § 5015 and § 3218. Argues procedural defects in the original filing, substantive defenses (usury, unconscionability, fraud in the inducement), and any jurisdictional issues.
• Discovery (if granted). Subpoena underwriting files, daily-debit records, and ISO commission documents. This is where most cases settle — funders rarely want their underwriting practices in the record.
• Settlement or trial. 90%+ of vacated COJ cases settle on terms favorable to the borrower because the funder's leverage is gone the moment the TRO issues.

The 3 filing errors that kill 80% of COJs

From our review of hundreds of MCA-filed COJs over the past four years, three errors recur with stunning frequency:

• Defective venue — the affidavit recites a county that doesn't match where the borrower resides or does business. CPLR § 3218(b) requires venue to be where the affidavit was executed. Wrong county = automatic vacate in many cases.
• Stale or amended balance — the COJ was filed for an amount that doesn't match the contract's payoff calculation at the time of default. Funders frequently inflate the COJ amount to include speculative future fees — courts strike these regularly.
• Missing notarization or jurat — the affidavit must be sworn before a notary. We've seen COJs filed with electronic signatures that fail the formal requirements of jurat language. This is the single most common defect.

What happens after you vacate

Vacating the COJ is not the end — it's the start of a real negotiation. Without the judgment, the funder is back to being an unsecured creditor pursuing a contract claim. They can still sue, but they have to do it the slow, expensive way: complaint, answer, discovery, motion practice, trial.

Most funders don't have the appetite for that, especially when their underwriting file would be subpoenaed. The vacate motion is, more than anything, a leverage reset. It moves the case from a unilateral collection posture to a real negotiation — and from that posture, settlements at 30-50% of claimed balance are routine.