What is a Confession of Judgment (COJ) and Why It’s Dangerous

Bypassing Your Day in Court

A Confession of Judgment (COJ) is arguably the most dangerous clause a business owner can sign. Embedded deeply in many Merchant Cash Advance agreements, a COJ is a written agreement in which you accept liability and agree to a predetermined judgment amount in the event of a default.

Immediate and Devastating Consequences

• Bank Levies: The lender can send a marshal to your bank to freeze your accounts and seize all available funds without warning.
• Asset Seizure: Physical assets belonging to the business can be seized to satisfy the judgment.
• Personal Liability: If your MCA required a personal guarantee, a COJ allows the lender to go after your personal assets.

Defending Against a COJ

Due to widespread abuse, several states (notably New York in 2019) passed laws banning the use of COJs against out-of-state debtors. Even if it is filed locally, procedural errors and usury claims can provide legal grounds to challenge and overturn a COJ.