What New York’s Ban Covers, and What It Doesn’t
Per Moritt Hock & Hamroff’s analysis of the statute, New York banned confession-of-judgment clauses against out-of-state residents effective August 30, 2019, amending CPLR §3218 via Senate Bill 6395. A COJ executed after that date against a non-New-York-resident merchant is unenforceable in New York courts. The important nuance, easy to overstate into a blanket claim, is that the ban does not cover a New York-domiciled merchant at all; a COJ against a New York resident is a different legal question entirely.
That residency-based scope is exactly why “New York banned COJs” is a simplification that misleads more than it informs. A broker who treats it as a blanket ban risks assuming protections don’t exist for a New York-resident merchant, when the actual gap in the law runs the other direction.
Pennsylvania and Ohio: Still Permitted, With Rules
Confession of judgment remains legal in commercial transactions in Pennsylvania, subject to formatting requirements, per a legal analysis of the state’s COJ rules: the confession clause has to appear in bold type and be separately signed or acknowledged from the rest of the contract, rather than buried inside standard boilerplate. Per the Pennsylvania Criminal Lawyer Blog’s coverage of confessions of judgment in MCA contracts, Ohio permits what its own statute calls “judgments by confession” under Ohio Revised Code §2323.12 through §2323.13, with a required clearly visible disclosure in the business contract.
Both requirements share a theme worth noting: neither state bans the mechanism, but both require it to be conspicuous rather than hidden in fine print, a meaningfully different legal bar than an outright prohibition.
New Jersey: A Correction Worth Making Loudly
This is the most important correction in this article. Contrary to an earlier general characterization of New Jersey as a state where COJs “remain permitted in commercial transactions,” a legal analysis published by NYC Criminal & Federal Lawyers found New Jersey banned confession-of-judgment clauses in business financing agreements outright via N.J.S.A. 2A:16-9.1, enacted as Chapter 430 of the Laws of 2019 and effective April 21, 2020. The statute states that no provider of business financing may extend financing under an agreement containing a judgment by confession, and any such clause is invalid and unenforceable.
The New Jersey Attorney General enforces this ban with tiered civil penalties: $5,000 for a first violation, $10,000 for a second, and $15,000 for a third or subsequent violation. Courts also cannot enter judgment on a warrant of attorney without a motion and notice to the defendant, regardless of when the underlying agreement was signed.
This correction comes from a single named legal-analysis source, not an independent read of the codified statute. The statute number, chapter number, and penalty tiers cited above should be confirmed directly against the New Jersey Legislature’s own statute text before this correction is repeated as final in any external communication, rather than assumed settled on the strength of one source alone.
The Foreign-Judgment Workaround
Even New Jersey’s ban has a documented gap. A confessed judgment entered in a different, more permissive state, New York before its own 2019 ban, or Pennsylvania today, can sometimes still be domesticated and enforced in New Jersey under the Uniform Enforcement of Foreign Judgments Act. Many MCA contracts already include a New York or Pennsylvania choice-of-law clause for exactly this reason, and a funder may attempt enforcement under that more permissive state’s rules rather than New Jersey’s own.
That workaround generalizes past New Jersey specifically: a merchant’s home-state restriction on COJs does not automatically mean a funder has no path to enforcement at all, if the contract’s choice-of-law clause points somewhere more permissive.
Illinois and Virginia: What’s Reported, and What Still Needs Confirming
Illinois and Virginia are both commonly cited as states that permit confession of judgment in commercial financing agreements, but the procedural requirements each one imposes, formatting rules, disclosure language, or filing mechanics comparable to Pennsylvania’s or Ohio’s, were not independently verified in the research behind this article. Rather than presenting invented specifics with false confidence, this article states plainly that Illinois’s and Virginia’s exact rules should be confirmed against each state’s own statute before a broker relies on either state’s permissiveness as settled fact.
That gap is worth naming directly rather than papering over: a state’s general reputation for permitting COJs is not the same as knowing the specific formatting or disclosure rules that make a given clause enforceable there.
Why a Broker Needs the State-Specific Answer, Not a Regional Guess
The pattern across every state covered above is that COJ legality is never a simple yes or no, it is a specific statute, with specific formatting rules, specific penalties for getting it wrong, and, as New Jersey shows, a real possibility that a general characterization repeated widely enough turns out to be outdated or wrong. A broker assuming a merchant’s state follows a regional pattern, “it’s legal in the Northeast” or similar, is exactly the kind of shortcut that produced the outdated New Jersey claim this article corrects.
Confirming the current, specific status for a merchant’s actual state, not a regional assumption, is the only reliable approach, and it is the same discipline this vertical’s guide to what usury means for MCA argues for on a related legal-characterization question: read the specific statute, not the general reputation.
Sources
The external data in this article draws on the sources below. Figures described in the text as estimates or industry triangulations are directional and are not attributed to a single dataset.
- NYC Criminal & Federal Lawyers, Confession of Judgment in Pennsylvania: Is It Enforceable? 5 Rules for 2026
- Pennsylvania Criminal Lawyer Blog, 9 Things to Know About Confessions of Judgment in MCA Contracts
- NYC Criminal & Federal Lawyers, Is a Confession of Judgment Enforceable in New Jersey? 5 Rules for 2026
- Moritt Hock & Hamroff, New York’s New Confession of Judgment Law: The Unintended Consequences of Its Residency Requirements