Glossary · legal

Affidavit of confession of judgment

Also called COJ affidavit, affidavit of confession.

The sworn document, signed at closing, in which a business and its guarantor admit the debt in advance and authorize judgment to be entered without a lawsuit or hearing.

Drafted with AI assistance. Not yet independently checked. Nobody has verified the claims on this page against a source, so treat the figures and legal points as a starting point rather than as settled, and confirm anything you are about to act on. How we check things.

What it means

This is the instrument that makes a confession of judgment operate. It is signed and notarized at funding, then held. It states the amount owed or the formula for it, admits liability, waives service, notice, defences and the right to contest, and names the court where it can be filed. Nothing is filed while payments continue.

On the funder's declaration of default it is filed with a supporting affidavit stating the amount outstanding. Judgment can be entered by the clerk, often within days, and enforcement follows: bank restraints, levies on the operating account, and notices to the merchant's customers. The first thing many merchants learn about the filing is that the account has been frozen.

Legality varies sharply by state and is one of the few areas where the difference is decisive. New York amended CPLR 3218 in 2019 to restrict entry of confessed judgments against debtors who are not New York residents or entities, which closed a route heavily used against out-of-state merchants. Several other states will not enforce confessions of judgment signed before default at all, others permit them only with specific formalities, and some enforce them broadly. Which state's law and which court applies is set by the venue and choice-of-law clauses in the agreement, not by where the business operates.

The Federal Trade Commission has brought enforcement actions against funders over the use of these documents in small-business advances, and federal bills to ban them have been introduced without passing.

Where this one catches people

It is signed as part of the closing package, unlabelled and unremarked, alongside the ACH form and the guaranty. Merchants remember signing a contract and not this. The affidavit is what converts a contract dispute into a judgment before you have argued anything, so the amount stated in it and the court named in it matter more than almost any other page.

Where you will meet this term

Merchant Cash Advance Working Capital

Read next

Acceleration clauseThe clause that makes everything still owed due immediately on default, rather than on the original schedule. Confession of judgment (COJ)A pre-signed admission of liability that lets a funder obtain a court judgment on default without suing you, … JudgmentA court's final determination that one party owes another a sum of money, which converts a contractual claim … Jurisdiction clauseThe provision fixing which state's law governs the contract and where any dispute must be brought — the claus… LevyThe actual seizure of funds or property to satisfy a debt, as opposed to a lien, which is only a claim agains… Personal guarantee (PG)An individual's separate promise to pay the business's obligation out of personal assets, enforceable even af…

Affidavit of confession of judgment — common questions

What does affidavit of confession of judgment mean?

The sworn document, signed at closing, in which a business and its guarantor admit the debt in advance and authorize judgment to be entered without a lawsuit or hearing.

Where does affidavit of confession of judgment catch people out?

It is signed as part of the closing package, unlabelled and unremarked, alongside the ACH form and the guaranty. Merchants remember signing a contract and not this. The affidavit is what converts a contract dispute into a judgment before you have argued anything, so the amount stated in it and the court named in it matter more than almost any other page.

Is affidavit of confession of judgment the same as an interest rate?

Affidavit of confession of judgment is defined above; if you are comparing it against a rate, check whether the two measures share a time dimension before you put them side by side.

Which products does affidavit of confession of judgment apply to?

Merchant Cash Advance, Working Capital.

Is there a worked example of affidavit of confession of judgment?

Not on this entry. Where a term is arithmetic, the arithmetic is shown; this one is not primarily a calculation.

What else should I read alongside affidavit of confession of judgment?

Acceleration clause, Confession of judgment, Judgment, Jurisdiction clause, Levy.

Has this definition been checked?

Not yet. This entry is drafted and live, and the notice at the top says so. Confirm anything you are about to act on.

Is this legal advice?

No. It is a definition. What a clause does in your contract, in your state, is a question for a lawyer licensed where you are.

Can I suggest a term?

Yes — [email protected]. The glossary grows from what people are actually shown in contracts.