Confession of Judgment Filed Against You: First 72 Hours

A confession of judgment is the fastest enforcement instrument an MCA funder has. It converts a contract dispute into an enforceable judgment without notice, without a hearing, and often within 24 hours of filing. By the time most owners learn a COJ has been entered, the bank has already received a restraining notice and the operating account is frozen. The first 72 hours determine whether you can vacate the judgment, free the account, and protect the business. This article walks through the procedures in the four states where COJ enforcement is most active: New York, Florida, California, and Texas.

TL;DR

• A COJ becomes an enforceable judgment as soon as it is filed and signed by the clerk. Typical filing-to-account-freeze is 24 to 72 hours.
• New York is the most active COJ venue but reformed the statute in 2019 to require the funder to be located in New York. Many older COJs are now defective.
• Florida and Texas remain active COJ venues with shorter motion-to-vacate windows. California does not recognize COJs entered against California businesses.
• The motion to vacate must be filed in the venue named in the COJ, not your home venue, and the deadline ranges from 10 days to 30 days depending on state.
• An account freeze can be partially lifted within 5 to 10 days through a motion or a negotiated release, often before the underlying COJ is resolved.
• Coordinate immediately with licensed counsel in the COJ venue. Self-representation on a COJ motion is almost always a losing path.

What a COJ actually does

A confession of judgment is a clause buried in the MCA contract where the merchant pre-authorizes the funder to enter judgment against the business and any personal guarantors upon default. The clause typically names a venue (often New York, Florida, or Texas regardless of where the merchant is based) and waives the merchant's rights to notice, hearing, and most defenses.

When a default occurs (typically defined as a missed daily debit or a "stacking" event where the merchant takes a new MCA), the funder's counsel files the COJ in the named venue along with an affidavit of default. The clerk signs the judgment. The judgment is now enforceable.

Within 24 to 72 hours, the funder serves a restraining notice on the merchant's bank. The bank freezes the account up to the judgment amount, including treble damages and attorneys' fees if the COJ language allows. Operating cash that was there yesterday is gone today.

The merchant typically learns about the COJ from the bank, not from the funder.

The first 24 hours

What to do in the first 24 hours after learning of a COJ:

Locate the filing

Search the docket in the named venue. New York County Supreme Court, Miami-Dade County Circuit Court, and Harris County District Court are the most common venues. The filing will name the merchant, the personal guarantors, the underlying contract, and the judgment amount. Pull the filed documents (the COJ itself, the affidavit, and the proposed judgment).

If you cannot find the filing, the freeze may be a pre-judgment attachment rather than a post-judgment freeze. Different procedures apply.

Inventory the freeze

Call the bank. Determine which accounts are frozen and the exact amount of the freeze. The freeze is typically capped at the judgment amount plus interest plus fees, often 110 to 130 percent of the actual judgment. Funds above that cap should be available.

If the bank has frozen all funds without applying the cap, that is itself a basis for a motion to release. Banks sometimes over-freeze.

Identify other accounts

The restraining notice goes to the banks named in the funder's research. If the merchant has accounts at other banks not named in the notice, those accounts are not frozen. Move operating cash to those accounts immediately if they exist and the transfer is permitted under the underlying agreements.

Do not open new accounts at the same bank that received the notice. The notice applies to the bank, not the specific account number, so new accounts at that bank will be frozen on opening.

Engage counsel in the COJ venue

The motion to vacate must be filed in the venue named in the COJ, by counsel licensed in that state. The home-state attorney cannot file in another state's court. Engage local counsel in the COJ venue immediately. Our liaison practice coordinates licensed counsel in all 50 states.

State-by-state procedures

The procedure for vacating a COJ varies meaningfully by state. Below are the four most common venues.

New York

New York was historically the most active COJ venue. In 2019, the New York State legislature amended CPLR 3218 to require that the COJ be signed in New York, against a New York resident or business, by a person who was in New York at the time of signing. COJs that do not meet these requirements are facially defective.

Many MCAs filed before 2020 used New York COJs against out-of-state merchants. These COJs are vacatable on the amended statute, often through a relatively quick motion. New York COJs filed after the amendment, against out-of-state merchants, are also vacatable on the same ground.

The motion to vacate in New York is filed in the same Supreme Court that entered the judgment. The standard deadline is 30 days from learning of the judgment, though courts have accepted motions filed later when the merchant can show prompt action.

The restraining notice in New York operates under CPLR 5222. A motion for partial release can be filed alongside the motion to vacate, asking the court to release operating funds while the underlying motion is decided. These motions are often granted on the same docket.

Florida

Florida recognizes COJs under Florida Statutes section 55.05. The statute requires the COJ to be in writing, signed by the obligor, and contain specific warning language. Many older MCA COJs lack the required warning language and are defective on the face of the document.

The motion to vacate in Florida is filed under Florida Rule of Civil Procedure 1.540, with a deadline that depends on the basis for the motion. Defective COJs (lack of warning language, lack of consideration, fraud) can be challenged at any time. Procedural defects must typically be challenged within 30 days.

Florida courts are generally more receptive to merchant defenses than New York courts on COJs, particularly where the underlying contract is unconscionable or the effective APR is usurious. Florida usury law applies different standards depending on contract size, with the 18 percent civil usury cap relevant for contracts under $500,000 and the 25 percent criminal usury cap relevant for larger contracts. MCA contracts that exceed these thresholds on effective APR have a real usury defense in Florida.

Texas

Texas allows COJs only in limited circumstances. Texas Civil Practice and Remedies Code section 31.005 requires the COJ to be entered into after the cause of action has accrued, which makes pre-default COJs (the standard MCA form) generally unenforceable in Texas.

MCA funders sometimes file COJs in Texas anyway, treating the contract clause as enforceable. These judgments are typically vacatable on a motion that argues the COJ was entered before the default and therefore outside the statute. The motion deadline in Texas under Rule 329b is 30 days, but extensions are commonly granted.

Texas account freezes operate through writs of garnishment, which require a separate proceeding from the COJ filing. A successful motion to vacate the COJ also dissolves the writ of garnishment.

California

California does not enforce COJs entered against California businesses or residents under California Code of Civil Procedure section 1132. A COJ filed against a California-based merchant in any state is unenforceable in California for purposes of asset attachment in California.

In practice, this means California-based merchants targeted by COJs filed in New York or Florida face freezes only on out-of-state accounts. California bank accounts remain unfrozen. The COJ itself is not vacated automatically, but the practical effect on California assets is limited.

A California-based merchant should still file a motion to vacate the COJ in the named venue, because the judgment is otherwise reportable and can be domesticated in California later if California law changes.

The motion to vacate

The motion to vacate is the legal instrument that undoes the COJ. The grounds vary by state but typically include:

• Defective COJ language (missing warnings, missing signatures, missing notarization)
• Funder location violations (in New York post-2019)
• Pre-default execution (in Texas)
• Underlying contract defects (usury, unconscionability, fraud in the inducement)
• Procedural failures in the filing (improper service, incorrect amount, wrong venue)

A successful motion vacates the judgment and dissolves the restraining notice. Funds are released. The underlying dispute reverts to the contract, which can then be settled or litigated on the merits.

Motion timelines vary. New York motions are often decided within 30 to 60 days of filing. Florida motions can take 60 to 120 days. Texas motions are typically decided in 30 to 90 days.

Coordinated settlement during the motion

The motion to vacate creates leverage for settlement. A funder facing a credible motion that may vacate the COJ often settles the underlying contract to avoid the risk of losing the judgment entirely.

A coordinated strategy runs the motion and a settlement proposal in parallel. The motion creates pressure. The settlement proposal gives the funder a clean exit. Many COJ cases resolve through settlement at 30 to 50 percent of face balance within 60 to 120 days of the motion filing, before the motion is even decided.

This coordination requires a creditor liaison working with licensed counsel in the COJ venue. The liaison handles the settlement outreach. Counsel handles the motion. Information flows between both.

What to do next

If a COJ has been filed against you and your account has been frozen, the clock is short and the venue rules matter. Contact us today. We coordinate licensed counsel in the COJ venue, file the motion to vacate, run the parallel settlement outreach, and protect the operating accounts that have not yet been frozen. The first 72 hours set the timeline for everything that follows.