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NY Confession of Judgment Ban: What It Means for MCA Debt (2026)

New York banned Confessions of Judgment against out-of-state defendants in 2019. Here's what the ban actually changed, what it didn't, and how it affects MCA debt today.

By Bar Alezrah12 min readPublished April 16, 2026 · Updated April 16, 2026

If you signed an MCA contract before 2019, there is a real chance you also signed a Confession of Judgment tucked into the closing packet. For years, that single document was the most destructive clause in the merchant cash advance industry. Then New York passed Senate Bill S6395 in August 2019 and the pipeline that fed the confession machine got cut off almost overnight. This article walks through what a Confession of Judgment actually was, how MCA funders weaponized it, what the 2019 reform did and did not change, and what you can do if a pre-2019 COJ was already entered against you. For the broader NY attorney landscape see MCA Attorney New York, and for the core legal framework see MCA Laws in New York.

What a Confession of Judgment Actually Was (pre-2019)

A Confession of Judgment is a document in which a debtor signs, in advance, an admission that the debtor owes a specified sum and consents to the entry of judgment without notice, without a hearing, and without any opportunity to contest the debt. In New York, CPLR 3218 was the statute that authorized the mechanism. A creditor holding a signed confession could walk into a county clerk's office anywhere in the state, hand it over with a short affidavit, and the clerk would enter judgment as a ministerial act. No judge reviewed it. No service of process was required on the debtor.

The theory behind the old rule was narrow and commercial. If two sophisticated parties agreed in advance that a dispute could be resolved by summary entry of judgment, the courts would respect that bargain. In practice, CPLR 3218 became a tool that allowed a creditor to obtain an enforceable judgment in hours rather than months, and to begin asset restraint and bank levy before the debtor had any chance to respond.

For most of the twentieth century this was a rarely used device. Commercial borrowers with real leverage refused to sign one. Banks did not ask for them. The Uniform Commercial Code made lien-based security adequate for most secured credit. The Confession of Judgment was a historical footnote until a specific industry found it and scaled it.

How MCA Lenders Weaponized COJs Before 2019

The merchant cash advance industry found the Confession of Judgment around 2012 and within five years had turned it into a standard contract provision. The mechanics were simple. At closing, the merchant signed a stack of documents that included the funding agreement, the reconciliation addendum, personal guarantees, and a Confession of Judgment naming a specific dollar amount, usually the full purchased amount plus attorney fees and costs. The funder filed the COJ away. If the merchant ever missed a scheduled ACH pull, the funder's counsel walked the COJ to a Manhattan, Westchester, Nassau, or Orange County clerk and obtained a judgment within hours.

The abuse that followed was extensively documented in public investigative reporting. Bloomberg's 2018 series documented tens of thousands of COJs filed by MCA funders in a single four-year window, often with falsified default affidavits, inflated amounts, and judgments against out-of-state small businesses that had never set foot in New York. County clerks processed them in batches. Merchants learned of the judgment only when their bank accounts were frozen.

What made this particularly devastating for merchants was the speed. A traditional collection lawsuit takes months to reach a judgment. The COJ compressed that timeline into a single afternoon. By the time the merchant hired counsel, the funder had often already collected enough through bank restraints and levies to effectively end the business. Even when the underlying contract had strong defenses, those defenses could not be raised until after a motion to vacate had been filed and argued, and by then the money was gone. The COJ turned the legal dispute upside down, putting the burden of initiating court action on the debtor rather than the creditor.

The 2019 Ban: What S6395 Did and Didn't Do

Senate Bill S6395, sponsored by Senator Brad Hoylman and Assemblymember Helene Weinstein, was signed into law in August 2019. The full bill text is on the New York State Senate site. The reform amended CPLR 3218 to add a single operative limit. A Confession of Judgment can now only be filed in New York if the debtor was a resident of New York at the time the confession was signed. For business entities, that means the entity had to be organized under New York law or maintain its principal place of business in the state.

This closed the out-of-state pipeline that had fed the COJ machine. The funders who had been routing COJs against debtors in California, Florida, Texas, and forty-five other states through Manhattan and Westchester clerks lost their access to the New York mechanism overnight.

Three things the 2019 reform did not do, which are frequently misunderstood:

• It was not retroactive. A COJ entered in New York before the amendment took effect is still a valid judgment. The statute does not authorize courts to vacate pre-reform COJs simply because they would be impermissible today.
• It did not ban COJs against New York debtors. A merchant with a New York business address who signed a COJ after 2019 can still have it enforced. This is a narrow but important carve-out that some funders still use with New York-based clients.
• It did not eliminate funder lawsuits. Funders now file plenary actions in New York Supreme Court, usually the Commercial Division. The cases move through normal civil procedure with service, answer, discovery, and motion practice. They take longer but they are contestable on the merits.

The operational shift in the defense bar has been real. Before 2019, most New York MCA practice was emergency motion work to vacate COJs entered without notice. After 2019, most New York MCA practice is regular litigation defense, which allows earlier intervention and cleaner record building.

Existing COJs from Before 2019 (what if one was already entered against you)

A pre-2019 COJ does not expire. It sits on the docket as a valid money judgment until it is either paid, settled, or vacated by a court. New York judgments are generally enforceable for twenty years under CPLR 211, and the judgment creditor can renew that by filing a new action. If you had a COJ entered against your business in 2016 and never addressed it, the judgment is still live.

Practical consequences include:

• The judgment creditor can restrain bank accounts, garnish receivables, and levy personal and business assets located in New York at any time. Out-of-state assets usually require the creditor to domesticate the judgment in the asset's state, which most MCA creditors do pursue.
• The judgment accrues post-judgment interest at the New York statutory rate of 9% under CPLR 5004, which is separate from any contractual interest that was capitalized into the COJ amount.
• The judgment creates a lien on real property in any New York county where it is docketed, which can complicate sales, refinances, and estate transfers.
• The judgment appears on commercial credit reports and public records databases, which may affect future credit applications.

The only way to remove the judgment is to satisfy it through payment or settlement, or to vacate it through a motion in the court where it was entered. Neither path is automatic, and both require work. An attorney with Commercial Division experience can evaluate which path is realistic for your specific judgment after reviewing the confession document, the underlying contract, and the filing record. The cross-cluster MCA lawsuit being sued playbook covers broader dynamics once any MCA judgment is in play.

How to Vacate a Pre-2019 COJ (procedurally, via NY court motion)

A motion to vacate a Confession of Judgment is governed by CPLR 5015, which lists the grounds for relieving a party from a judgment. The rule is publicly available through the New York Unified Court System site. The most common grounds a defense attorney relies on in the MCA context are the following.

Fraud or misrepresentation. If the funder falsified the default affidavit, inflated the amount claimed, or represented facts that did not match the contract, the judgment can be vacated under CPLR 5015(a)(3). Bloomberg's reporting and subsequent Attorney General enforcement actions have documented systematic falsification at several major funders, and that record is sometimes usable in private motions.

Lack of personal jurisdiction. CPLR 3218 required the debtor to sign the confession with full knowledge, in a specific form, and sometimes in the presence of a notary. Defects in execution, notary issues, or execution in a state where the debtor lacked New York minimum contacts can support a jurisdictional challenge.

Procedural defects in the confession itself. The confession document must specify the amount, the facts constituting the debt, and the authorization to confess. A COJ that is vague on any of these elements can be challenged as facially invalid.

Excusable default and meritorious defense. Under CPLR 5015(a)(1), a court can vacate a judgment when the debtor shows a reasonable excuse for failing to appear and a meritorious defense. In the COJ context, the "reasonable excuse" is often structural: the debtor had no notice of the filing because none was required. The meritorious defense typically ties to recharacterization, usury, or funder breach.

Vacatur motions have a time limit. CPLR 5015(a)(1) generally requires filing within one year of learning of the judgment, though fraud grounds under (a)(3) are not bound by that window. Pre-2019 COJs that have been on the docket for years are the hardest to attack on timing grounds, which is why counsel look first at fraud and jurisdictional theories.

The practical result is that vacating a pre-2019 COJ is a fact-intensive motion that requires a careful review of the confession, the underlying contract, the funder's default affidavit, and the filing record at the county clerk. It is not a letter you send and it is not cheap, but in the right fact pattern it is achievable. The cluster sibling New York MCA Defense Attorney covers the defense mechanics in depth, and the pillar MCA Attorney Complete Guide covers when attorney intervention moves the needle versus when settlement through best MCA debt relief companies is the more pragmatic route.

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