What Is Confession of Judgment (COJ)?

lendsaas's and mcarocket's glossaries both flag COJs as legal documents allowing immediate judgment on default without trial, restricted or banned in many states. New York is the most consequential and most citable example. New York banned COJs against out-of-state residents effective August 30, 2019, amending CPLR Section 3218 via Senate Bill 6395. COJs executed after that date against non-New-York-resident merchants are unenforceable in New York courts.

The nuance matters. The ban does not cover New York-domiciled merchants, and COJs remain permitted in commercial transactions in several other states, including Pennsylvania, Ohio, Illinois, Virginia, and New Jersey. Saying COJ is banned as a blanket statement overstates New York's actual rule and ignores every other state entirely.

The New York Attorney General's action against Yellowstone Capital is the largest, most citable MCA enforcement case tied to judgment and collection abuse found in this research. Filed March 2024, it alleged illegal high-interest loans disguised as MCAs, with fraudulent collection practices including improper court judgments and UCC liens. The settlement totaled roughly $1 billion in debt relief, with $534 million in merchant debt automatically canceled, and the settlement fund was reported insufficient to fully compensate all victims.