CONFESSION OF JUDGMENT: A VERY IMPORTANT, POSSIBLY TOXIC TOOL IN MCA DEFAULTS
Are you stressed out by toxic merchant cash advance agreements?
Are you worried about a confession of judgment hiding in the fine print?
DELANCEY STREET OFFERS A MONEY BACK GUARANTEE FOR DEBT RELIEF SERVICES
We’re DelanceyStreet.com, a top tier business debt relief company, and we help small businesses fight back when MCA Lenders try to catch them off guard with Confession of Judgment sections.
WHAT IS A CONFESSION OF JUDGMENT?
A confession of judgment (COJ) is a strong legal document that lets an MCA Lender get a judgment against you without the normal court process. Instead of filing a lawsuit and going through the normal stages of a lawsuit, the COJ allows the lender to skip right to a judgment—no hearing, no notice. In states where COJs are still allowed, they can lead to quick bank account withholdings, liens on things you own, and other huge penalties.
According to N.Y. C.P.L.R. 3218 (which you can read at NY Senate’s official site), a real confession of judgment basically hands the lender the right to make you pay the debt the moment they claim you did not pay.
WHY DOES IT MATTER FOR MCA DEFAULTS?
MCA Lenders often include confession of judgment wording in their agreements. Then, if you can’t keep up with daily or weekly payments, they file the COJ in court—instantly getting a judgment against you, your personal assets, and business assets.
SOME STATES HAVE BANNED COJs
Several states have banned or strongly limited confessions of judgment for out-of-state business owners, because of consumer protection issues. (See Federal Trade Commission guidance on mean lending practices.) But if your agreement is covered by the laws of a state letting COJs happen, the lender might make it happen very quickly.
PENALTIES & LEGAL CONSEQUENCES
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Quick Frozen Accounts
Once the lender files the COJ and gets a judgment, they can tell a marshal or sheriff to freeze your business bank accounts. That means no cash flow, no ability to meet payroll, and a total halt for your operations. For most businesses, it can be over instantly. -
Paycheck Withholdings & Liens
Even though COJs usually apply to business debt, some lenders try to connect them to personal guarantees. If they do that, they can take from personal wages or place liens on your property, it means its not an actually unsecured, merchant cash advance. -
Damaged Credit
Judgments show up on your credit report. That leads to higher financing costs later, or total denial of new credit. -
Potential for Double Dipping
Some dishonest MCA Lenders stack multiple Confessions of Judgment, locking up all your stuff if you fail to meet multiple obligations.
BOTTOM LINE: A Confession of Judgment can sink your business right away.
LEGAL DEFENSE STRATEGIES
FIRST STEP: Question It
- Was the COJ correctly notarized?
- Does the agreement meet the rules of your state?
- Is the MCA Lender really allowed to file the COJ?
If the lender made mistakes—like filing in the wrong court location—you might take apart their claim right away. There are many technical ways to get out of repaying your merchant cash advance in debt, in full, if there are legal basis for it.
SECOND STEP: Claim You Had No Notice or You Were Forced
Some courts want a hearing if there’s proof you didn’t fully understand the COJ. If you can show you were forced or misled, you may have reasons to nullify the judgment, and negotiate a brand new settlement agreement.
THIRD STEP: Argue the Default
MCA Lenders often say you’re in default, without any real proof. If you have proof of payments or there are disagreements about the amount owed, the court may throw out the COJ.
FOURTH STEP: Federal & State Consumer Protection Laws
While the Federal Trade Commission (see FTC Business Guidance) mainly covers consumer matters, certain misleading or not fair ways can include business debt relief.
“WE CAN HELP YOU” WITH A TWO-PART APPROACH
At DelanceyStreet.com, we have a focused debt relief team and a partner law firm. That means we’re able to handle talks with MCA Lenders and file any needed legal papers on your behalf.
STREAM OF CONSCIOUSNESS: HOW A COJ CAN GET TAKEN APART
Honestly, a Confession of Judgment can fall apart like a house of cards if you show the small print problems in the document. If the lender lied about the total cost, or you never got a copy of the COJ after signing, that whole setup might be canceled. Guess what? Courts don’t like hidden problems. They’re created to protect the public interest, and no lender wants a big problem over how they avoided basic fairness. Anyway, when you look deeper at an MCA agreement with a COJ included, you often find careless statements, conflicting terms, or proof the borrower was never given enough time to read or review.
KEY DEFENSE STRATEGIES WE’D USE TO PROTECT YOU
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Quick Look at All Legal Documents
We gather every piece of proof, from your signed agreement to your bank statements, to find possible mistakes. -
Talk with the MCA Lender
Because any lender wants to get paid back, they might agree to new terms, or even to a settlement, if they see you have strong defenses in place. -
File Motions to Cancel the Judgment
If the COJ was filed in bad faith, or filed with incomplete information, a motion to cancel can push the lender back to the table—or get the judgment thrown out totally. -
Look for Breaking State Rules
We check your state’s stance on confessions of judgment. If the lender’s using a place with more easygoing COJ laws—though you run your business in a state that bans them—we argue it’s an illegal “choice of location.” -
Use Our Money Back Guarantee
We believe in our debt relief plan so much that DelanceyStreet.com offers a money back guarantee for debt relief services. In short: if we don’t help lower your MCA debts, we stand by our promise.
WHY DELANCEY STREET?
- We have know-how with Confession of Judgment fights.
- We’re DEDICATED to protecting small businesses from dishonest MCA Lenders.
- We’re AGGRESSIVE about getting better terms on your behalf.
RECAP
Confessions of Judgment can lead to quick asset takes, credit damage, and total business shutdown. No matter if you’re facing a SBA loan problem, or a merchant cash advance meltdown, we can help you protect your interests.
READY TO FIGHT BACK?
We’re DelanceyStreet.com, a top tier business debt relief company, and we want to help you breathe again. Don’t let an MCA Lender’s COJ become the final word on your financial future.