Confessions of Judgment

A judgment entered without a lawsuit, and how to attack it

A judgment without a lawsuit

Many merchant cash advance agreements come with an affidavit of confession of judgment. If the funder claims a default, it can file that affidavit with a county clerk under CPLR 3218 and have a judgment entered. There is no summons, no complaint and no judge reviewing the claim first. Most business owners learn about it when their bank account is frozen.

The 2019 change for out-of-state businesses

A 2019 amendment to CPLR 3218 requires the affidavit to state the county where the defendant lived when it was signed, limits filing to that county, and bars entry of the judgment against someone who did not live in New York when the affidavit was signed. For many out-of-state merchants and guarantors, that is a defect visible on the face of the court record.

Common grounds to vacate

• The defendant was not a New York resident, or the judgment was filed in the wrong county
• The affidavit does not state the facts of the debt or show that the amount is justly due
• The judgment is for more than the affidavit authorizes, such as added fees and interest
• Fraud or other problems outside the record, which may require a separate lawsuit rather than a motion

Vacating the judgment is only half the job

A pending motion does not by itself unfreeze an account. We ask the court for a stay or a protective order in the same application, so enforcement stops while the motion is decided. See frozen bank accounts.

What to send us

• The affidavit of confession of judgment and the funding agreement
• The judgment and any papers from the county clerk
• Any restraining notice, subpoena or bank letter you received

Frequently asked questions