Two terms get mixed up constantly in MCA collections: consent judgment and confession of judgment. Funders and even some attorneys use them interchangeably. They are not the same. The procedural differences matter, and so do the strategic differences for the borrower.
| Dimension | Confession of Judgment (COJ) | Consent Judgment |
|---|---|---|
| When signed | At funding, before any default | After lawsuit filed, with counsel |
| Court hearing | None – filed unilaterally | Yes – case is open |
| Notice to borrower | None before filing | Full service of process |
| Negotiation room | Zero at filing | Full – terms of entry |
| Defenses preserved | Waived in advance | Used as leverage |
| Settlement structure | N/A – judgment enforced | Payment plan, abeyance |
| Vacate-ability | Possible – procedural grounds | Very limited (you consented) |
| Borrower posture | Defensive / reactive | Active / strategic |
Confession of Judgment: Defined
A confession of judgment, or COJ, is a document the borrower signs at the time the MCA is funded. It is an acknowledgment, executed in advance, that if the borrower defaults, the funder can enter judgment without notice, without a lawsuit, and without an opportunity to defend.
The defining features of a COJ:
- Signed at funding, before any default occurs
- No lawsuit needs to be filed
- No service of process on the borrower
- No opportunity to answer or defend before judgment is entered
- Filed by the funder unilaterally when default occurs
COJs are restricted or prohibited in many states. New York restricted them against non-New York residents in 2019. Some states have never permitted them. Enforceability depends on the contract’s choice of law and the borrower’s location.
Consent Judgment: Defined
A consent judgment is something else. It is a judgment entered with the borrower’s consent after a lawsuit has been filed, typically as part of a settlement. The borrower agrees, with knowledge of the engagement and ideally with independent counsel, that judgment will be entered for a specified amount.
Defining features:
- Entered after a lawsuit has been filed and the borrower has been served
- Requires the borrower’s active, informed consent at entry
- Typically part of a settlement agreement
- Often includes payment terms, with judgment held in abeyance if payments are made
- The borrower has the opportunity to negotiate amount and terms
A COJ is signed before you know there is a problem. A consent judgment is signed when you do know and you have time and counsel to negotiate. The first removes your defenses. The second uses them to reach better terms.
Why Funders Push for Consent Judgments in Settlement
When a funder agrees to settle with payments over time, it wants protection if the borrower defaults on the settlement. A consent judgment held in abeyance is the common solution. The judgment is entered but not enforced as long as settlement payments are made. If a payment is missed, the funder enforces for the full original amount.
This is normal and often acceptable, but the terms matter. The borrower needs a cure period for missed payments, a realistic balance, clear release language, and the judgment held in escrow rather than filed immediately.
The Strategic Difference
Facing a COJ: the borrower’s leverage is procedural. The motion to vacate is the tool, on grounds of improper execution, statutory restrictions, fraud, or material misrepresentation.
Facing a consent judgment proposal: the borrower’s leverage is substantive. The defenses to the underlying debt are still in play because the lawsuit is open. The negotiation is about amount, payment schedule, cure provisions, and release scope.
When Each Appears
COJs appear at the start of a dispute. The funder finds default, pulls the COJ from the file, and files it. The borrower is reactive.
Consent judgments appear later, after a lawsuit has been pending for months. An answer has been filed, defenses have been raised, and the parties are negotiating resolution. The consent judgment is the wrapper for that resolution.
Judgment amount = negotiated settlement, not original claim.
10-30 days with written notice before acceleration.
Acceleration only on material default, not a single late payment.
Personal guarantee released for any balance above the agreed sum.
Judgment held by counsel, only filed on uncured default.
Release language tied to the specific debt, no broad waivers.
Negotiating the Consent Judgment
A senior advisor handling negotiation and an independent attorney handling the legal terms can shape a consent judgment to function as security for the settlement rather than a separate enforcement weapon. Key terms:
- Judgment principal pegged to the settled balance, not the original claim
- Real cure period for missed payments, ten to thirty days with written notice
- Acceleration only after material default, not a single late payment
- Release of personal guarantee liability above the settlement
- Affidavit of judgment held in escrow rather than filed immediately
- Mutual release language scoped to the specific debt
A consent judgment can be a fair tool or a trap, depending on terms. Drafting matters more than the headline settlement amount.
Do not confuse the two. A COJ is something to fight or prevent. A consent judgment is something to negotiate carefully when settling an active lawsuit. Both involve the word judgment, but they sit at opposite ends of the borrower’s strategic position.
Delancey Street is a business debt-relief company, not a law firm. When a matter requires legal work, we refer you to an independent attorney from our referral network; the attorney–client relationship is between you and that attorney.
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