A confession of judgment is a document that enables a funder to get a judgment against you without filing a lawsuit. Merchant cash advance funders often put one in the agreement you sign so they can obtain a judgment against you in a matter of days without a trial. In many states, they can still be used.
What is a confession of judgment?
It is your consent to a judgment against you before any lawsuit exists. Under New York law, it “may be entered without an action” by “affidavit of the defendant.” N.Y. CPLR 3218(a).
They also go by other names, such as cognovit (named after the Latin phrase cognovit actionem, meaning he has acknowledged the action), or a warrant of attorney. See the FTC Credit Practices Rule.
In New York, you typically sign a separate “affidavit” swearing to the amount confessed and your county of residence. In Pennsylvania, you sign a “warrant of attorney” clause in the contract, and when it is filed, the funder’s lawyer actually signs the confession of judgment as your “attorney.” See Pa. R. Civ. P. 2955.
How is a COJ different from being sued?
When sued, you must be served, and only if you do not respond can the company apply for a “default judgment.” With a COJ, they simply file the confession you signed. There is no notice that you need to defend and no responsive pleading is required. See Pa. R. Civ. P. 2952(b). In New York, the county clerk enters judgment for the sum you confessed, and the statute does not require a judge to review it.
Why do they include a COJ in a merchant cash advance contract?
A COJ enables a funder to obtain a judgment against you quickly if they believe you have defaulted, without a trial on whether the advance is actually a usurious loan or whether you have even defaulted. The FTC said one merchant cash advance operator’s COJs allowed it “to go immediately to court and obtain an uncontested judgment.”
- If you signed a New York confession, the funder’s attorney can mail a restraining notice to your bank under N.Y. CPLR 5222 without any judge involved. Many owners first learn of a COJ this way.
- If you signed a personal guarantee, the COJ can be taken against you as an individual in addition to your business.
Consumer loans don’t include them because the FTC prohibits confessions of judgment in “credit extended to a natural person primarily for personal, family, or household purposes.” 16 CFR § 444.2(a)(1). Business financing, whether technically a loan or not, falls outside that rule.
In February 2024, a court entered a $20.3 million judgment in the FTC’s case against Jonathan Braun, the operator of RCG Advances. In January 2025, the New York Attorney General announced a judgment of $1.065 billion against Yellowstone Capital, cancelling $534.5 million owed by over 18,000 businesses.
How is a confession of judgment filed?
The funder files your signed confession with the county clerk (New York) or prothonotary (Pennsylvania). No hearing is needed.
| New York | Pennsylvania |
|---|
| What you signed | Affidavit of confession | “Warrant of attorney” clause in the contract or guarantee |
| Who signs the confession | You already did | The funder’s lawyer, as your attorney |
| Where is the COJ filed? | County clerk where you resided at signing or at filing | Prothonotary, with a complaint |
| When can the COJ be filed? | Within three years of signing | Leave of court needed if the instrument is over 20 years old |
| Notice before taking your property? | Not required before a bank restraint | Required before execution |
Filing in New York
Under CPLR 3218(b), the funder can file the COJ “within three years thereafter,” meaning three years from the date you signed it, with the clerk of the county where you lived at signing or at filing (a business resides wherever it has a place of business). The clerk then enters judgment in Supreme Court for the sum confessed, plus $15 in costs and disbursements. So, if you neither live in New York nor have a place of business there, the COJ cannot be filed in New York (at least not as of August 30, 2019).
Filing in Pennsylvania
The funder files a Complaint to Confess Judgment with the prothonotary under Pa.R.C.P. 2951. The Complaint must attach the instrument you signed, allege default and itemize the amount due (interest and fees only if the contract permits them). However, the funder cannot seize your property before giving you notice. See Pa.R.C.P. 2958.1 (notice 30 days before seeking a writ of execution, or with the writ). Generally, you have 30 days from receipt of the notice to petition to strike or open the judgment. See our step-by-step guide on what to do when you are served with a confession of judgment for a merchant cash advance in Pennsylvania.
Can they still use a confession of judgment in 2026?
It depends. A COJ can be filed in New York if you live there or your business has a place of business there. In Pennsylvania, it can be filed on a commercial instrument so long as the funder follows the notice and petition procedures above. Virginia (2022), California (January 1, 2023) and Texas (September 1, 2025) voided confessions of judgment in financing based on sales. Vermont will void them in sales-based financing as of July 1, 2027. No federal law prohibits COJs in business financing, and a New York bill barring them for amounts under $5 million has passed the Senate twice but is not yet law. See whether COJs are still legal in your state.
Frequently Asked Questions
Does a judge review a confession of judgment before it's entered?
Generally, the answer is no. In New York, the County Clerk will enter judgment for the amount confessed. In Pennsylvania, the COJ can be filed with the prothonotary without the need for an answer.
Is the three-year limit the amount of time the funder has to enforce the confession of judgment?
No, it is the time the funder has to file the confession of judgment after you signed it. Once entered, the judgment is enforced like any other New York Supreme Court judgment.
Will I receive notice before the funder can take my money?
In New York, your bank can be restrained before you even know about the confession of judgment. In Pennsylvania, the funder must serve you with notice before a writ of execution, either 30 days ahead or with the writ itself.
If I renew or restructure my advance, am I signing a new COJ?
Quite often, the answer is yes. Read any renewal, refinance or forbearance documents carefully for a new confession of judgment, which gives the funder a new three years (in New York) to file.