Confession of Judgment: What It Means and Why It Matters

What Is a Confession of Judgment?

A confession of judgment (sometimes called a COJ or cognovit note) is a clause in a contract that allows the lender to obtain a court judgment against you without filing a traditional lawsuit and without advance notice to you.

In practice, this means a funder can go to a court — often in their preferred jurisdiction, not yours — present the signed agreement, and obtain a judgment allowing them to collect from you. You may not know this has happened until your bank account is frozen or a levy is placed on your assets.

Why MCA Funders Use COJs

COJs are valuable to funders because they dramatically reduce the cost and time of collecting on a defaulted advance. Rather than going through months of litigation, they can obtain a judgment quickly and begin collection action.

This is why it is critical to understand whether your MCA agreement contains a COJ clause before signing — and what the implications are if you default.

What Happens When a COJ Is Entered

Once a confession of judgment is entered:

• The funder has legal authority to attempt to collect the judgment amount
• Bank accounts may be frozen or levied
• Assets may be subject to enforcement action
• The judgment appears in court records in the filing jurisdiction

The speed at which this can happen catches many business owners off guard.

Can a COJ Be Challenged?

In some cases, yes. Whether a confession of judgment can be vacated or challenged depends on:

• The jurisdiction where it was filed
• Whether proper procedures were followed
• The specific terms of the agreement
• State-specific laws, some of which have restricted COJ enforcement in recent years

This is a legal matter that requires the advice of a licensed attorney in the relevant jurisdiction. We can help you understand the situation and connect you with appropriate legal counsel.

What to Do If a COJ Has Been Filed Against You

If you have learned that a confession of judgment has been entered against you:

1. Act immediately — time limits may apply for any challenge
2. Do not ignore the situation — frozen accounts and asset levies can follow quickly
3. Get legal counsel — this is not a situation to navigate without an attorney
4. Understand your options — settlement may still be possible even after a COJ is entered

We can help you understand what has happened, coordinate with attorneys where needed, and pursue settlement discussions with the funder where appropriate.