What Is a Confession of Judgment? Meaning, State Laws & What to Know
A confession of judgment lets a creditor seek a court judgment without a contested lawsuit if you default. Here is how COJs work, where they are restricted and what to review if one is used against your business.
What is a confession of judgment? A confession of judgment (COJ) is a signed document in which a borrower agrees in advance that, if they default, the creditor may have a court judgment entered against them without a contested lawsuit. Merchant cash advance (MCA) funders often include one in their paperwork, and whether it can actually be used depends on state law and on what was signed.
If you signed a COJ, or your bank account was suddenly frozen, the key questions are: where can it be used, has a judgment actually been entered, and what do the signed documents and court record show? This guide covers what a confession of judgment means, how it works, which states restrict it and what a business may want to review.
What Is a Confession of Judgment?
A confession of judgment, sometimes spelled “confession of judgement” and historically called a cognovit note, is a written statement or affidavit in which a debtor admits a debt and authorizes a creditor to obtain a judgment for a stated amount if specified conditions are met, usually a payment default. In effect, the debtor agrees ahead of time not to contest the creditor’s claim through an ordinary lawsuit.
A signed COJ and an entered judgment are different stages. The document only authorizes a creditor to seek a judgment. Nothing happens in court until the creditor files it, and filing does not establish that every affidavit satisfies the statute or that every amount claimed is correct.
How a Confession of Judgment Works
- Signing. The borrower, and often an owner or guarantor, signs the COJ as part of a financing agreement or a settlement.
- Claimed default. The creditor asserts that a triggering event occurred, such as a missed or blocked payment.
- Filing. Where state law allows, the creditor files the COJ or affidavit with the court clerk. In New York, the clerk can enter judgment on a qualifying affidavit without an ordinary contested lawsuit.
- Enforcement. Once a judgment exists, the creditor may use enforcement tools such as bank restraints or levies, subject to the procedure and law that apply.
Many business owners first learn a judgment was entered when their bank account is restrained. That is why it matters to identify the judgment itself, not just the bank notice.
Confession of Judgment vs. Other Judgments
- Default judgment: entered after a lawsuit is filed and served and the defendant does not respond in time.
- Stipulated (consent) judgment: agreed to by both sides during a lawsuit that already exists, often as part of a settlement.
- Confession of judgment: authorized in advance, often before any dispute exists, so the creditor may be able to obtain a judgment without first filing an ordinary lawsuit.
Check who signed and in what capacity. A signature for a company, a personal guarantee and an individual confession of judgment are separate documents or obligations. Do not assume a business judgment automatically names every owner personally.
Are Confessions of Judgment Legal? State Rules at a Glance
There is no single national rule for business debts. Availability depends on the state where the COJ would be filed, the parties and the type of transaction. A few examples:
- Consumer debts: the FTC’s Credit Practices Rule generally prohibits confessions of judgment in consumer credit contracts covered by the rule. MCA and other business financing are typically treated differently.
- New York: still permits COJs under CPLR 3218, but since August 30, 2019 the filing must be tied to the defendant’s county of residence. See the next section.
- California: since January 1, 2023, amended Code of Civil Procedure § 1132 makes a judgment by confession unenforceable and bars entry in any superior court. Judgments obtained or entered before that date are not covered by the change.
- Florida: Fla. Stat. § 55.05 declares pre-suit powers of attorney to confess judgment void. Florida courts have, however, given full faith and credit to some confessed judgments that were valid in the state where they were entered, so a Florida business can still face an out-of-state COJ judgment.
- Pennsylvania: continues to allow confessed judgments in many commercial agreements under its own court rules and procedures.
These summaries are starting points, not a complete survey. Rules change, and a COJ’s validity depends on the specific state procedure, dates and documents.
Confessions of Judgment in New York After 2019
New York ended a major use of COJs against out-of-state debtors; it did not eliminate the procedure altogether. Effective August 30, 2019, the state removed the option for a debtor without qualifying New York residence to simply designate a New York county for entry of a confession of judgment. The change applies to judgments entered upon affidavits filed on or after that date. See the 2019 law and effective-date provision.
This restriction matters to MCA customers outside New York. A private creditor generally cannot use the New York COJ procedure against a debtor who had no qualifying New York residence at either relevant time. The funder’s New York address does not, by itself, satisfy the debtor-residence requirement.
When a COJ Can Still Apply in New York
Under CPLR 3218, the filing must be made in the qualifying county identified by the defendant’s residence when the affidavit was executed or the defendant’s residence when it is filed. For a business entity, the statute treats a county where it has a place of business as a residence. It also imposes affidavit requirements and a three-year filing period.
Being incorporated or headquartered outside New York is therefore not the complete analysis. Review each named defendant, the relevant dates and any New York place of business. The statute has a separate rule for government enforcement agencies; this discussion concerns private MCA creditors. These are New York rules and should not be applied automatically to a COJ or judgment in another state.
Merchant Cash Advance Confessions of Judgment
MCA agreements frequently include a COJ alongside a personal guarantee and a security agreement. A funder may present it as routine paperwork, but it can determine how quickly the funder could pursue a judgment if it claims a default.
In an MCA dispute, review whether the COJ names the business, the owner or both; what the agreement defines as a default; how the claimed balance credits payments already made; and which state’s procedure the COJ relies on. The inability to use a COJ does not end the matter, as discussed below.
If Your Account Is Frozen, Identify the Judgment First
A bank restraint or creditor notice can disrupt payroll and operating expenses. The restriction alone does not tell you whether a COJ, a judgment in an ordinary lawsuit or another procedure was used.
Ask for the documents identifying the creditor, court, case number, named debtor and amount claimed. Keep the notice and record when and how you received it. An attorney can use those details to locate the court record and assess what responses, if any, may be available.
The timing and reach of enforcement depend on the judgment, the assets, the procedure and applicable law. There is no universal rule that a bank must empty an account within a day or two, and a consultation or proposed challenge does not itself stop enforcement.
If the papers concern an ordinary lawsuit, the separate merchant cash advance lawsuit guide explains the documents and issues to review.
Should You Sign a Confession of Judgment?
Before signing a COJ in a financing package or settlement, have counsel review the proposed document together with the main agreement, any guarantee and the payment terms. Its consequences cannot be assessed from the heading alone.
- Which person or company would be subject to judgment?
- What event permits the creditor to use the document?
- How is the amount calculated, including credits for payments?
- Which state’s procedure is contemplated, and is it available?
- What do the settlement or payoff terms say about an unused COJ and existing judgments?
If you have already signed, preserve the complete copy. Counsel can assess what it authorizes and whether anything has been filed.
Can a Confession of Judgment Be Challenged?
A signed confession does not mean there can never be a challenge. It also does not guarantee that a challenge will succeed. An attorney must evaluate the asserted grounds, the available procedure, who may raise the issue and any applicable deadline.
For example, counsel may need to examine the filing location and dates, the affidavit, the claimed default, payment credits and the circumstances of signing. Not every defect can be raised by every party or through the same court filing.
Asking a court to set aside a judgment and asking it to pause enforcement are separate issues. Bring any restraint, levy or other enforcement notice to counsel’s attention promptly so the procedural options can be evaluated.
A COJ Restriction Does Not Resolve Every MCA Claim
The inability to use a particular COJ procedure does not, by itself, cancel the underlying agreement or resolve a guarantee. A creditor may seek relief through an ordinary lawsuit if the applicable requirements are met. Do not disregard a summons because you believe a COJ is unavailable.
Whether an MCA is legally a loan is another question. The governing law, agreement and relevant conduct matter; a contractual reference to changing payments does not answer every case. New York’s LG Funding decision illustrates a review of multiple features of the transaction.
Business financing is not outside all legal oversight. The FTC explains that protections against unfair or deceptive practices can apply to small businesses. The separate MCA regulation guide covers this broader topic.
Documents to Bring to a Free COJ Consultation
Keep one complete file so the signed terms can be compared with what the creditor actually filed:
- The MCA agreement, all amendments, guarantees and the signed COJ or affidavit.
- The court-stamped judgment and available docket or case information.
- Bank, marshal, sheriff, processor or creditor notices, including delivery details.
- Payment records, payoff statements, settlement terms and correspondence about the claimed default.
- Records showing the named defendants’ residence or business locations at the relevant times.
Tell the legal team whether funds are currently restrained, whether an enforcement date is stated and whether you have received separate lawsuit papers. Counsel should confirm the deadlines; do not infer them from a general article.
Speak With Business Debt Law Group About a Confession of Judgment
If you signed a COJ, received notice of a judgment or found your business account restrained, an MCA attorney can review the signed documents and court record and explain what options, if any, may be available. No particular result can be promised. All consultations are free. If you retain the firm, the engagement agreement explains legal-service fees and scope.
Signed a confession of judgment, or facing a judgment or frozen account? Free MCA review or case evaluation. No lawsuit is required.
General information, not legal advice. Contacting the firm does not create an attorney-client relationship. Results depend on the facts and applicable law.
Confession of Judgment FAQs
What does confession of judgment mean in simple terms?
It means agreeing in advance that a creditor may obtain a judgment against you for a stated amount if you default, without first defending an ordinary lawsuit, where the law allows it.
Does a confession of judgment have to be notarized?
Requirements vary by state. In New York, a COJ is an affidavit, so it must be sworn before a notary or other officer authorized to administer oaths. Other states have their own formalities.
How long is a confession of judgment good for?
It depends on the state. In New York, CPLR 3218 sets a three-year period for filing the affidavit. Once a judgment is entered, separate rules govern how long it can be enforced.
Is a confession of judgment the same as a judgment?
No. A signed COJ is permission to seek a judgment. It becomes a judgment only if the creditor files it and the court or clerk enters it.
Can a confession of judgment be used against me in another state?
Possibly. A judgment entered where the COJ was valid may be domesticated and enforced in another state, subject to that state’s rules. Whether this is possible depends on the facts and the law involved.
This article provides general information, not legal advice for a particular matter. Availability of a COJ, defenses and enforcement remedies depends on the jurisdiction, documents and facts. No outcome is guaranteed. Contacting the firm does not create an attorney-client relationship, pause enforcement or extend a court deadline.