What is a confession of judgment in a merchant cash advance?

It is a signed document in which a business, and often the owner personally, agrees in advance that a judgment may be entered against them if the agreement is declared in default, sometimes without a hearing first.

Are confessions of judgment still used?

Their use has narrowed over time through state and federal rule changes, and availability varies by state and by funder. Older agreements may still contain one, so the specific document you signed is what matters.

What should I do if a judgment has been entered against my business?

Collect the court paperwork, your agreements, and recent bank statements and speak with an attorney licensed in your state as soon as possible. Merchant Program Solutions is not a law firm and cannot advise on legal filings.

Common Questions

Confession of Judgment in an MCA Agreement: What It Means

A confession of judgment is one of the terms owners most often discover only after payments become difficult. This page explains in plain language what the document is, where it shows up, and what to review in your own paperwork. It is general information, not legal advice, and every business situation is different.

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What the document does

Acknowledges an amount that may become due if the agreement is declared in default
Authorizes the other side to present that acknowledgment to a court
Often covers both the business and the owner under a personal guarantee
Can shorten the usual path to a judgment considerably

Why the rules have changed

Use of these documents narrowed over time as states and federal regulators restricted them, particularly where the business is located outside the filing state. Availability now depends on the state, the date, and the funder. What governs your situation is the specific document you signed, not the general trend.

What to look for in your paperwork

Any page headed affidavit of confession of judgment or similar wording
Definitions of default, including technical defaults unrelated to missed payments
The stated venue, meaning the court and state named in the agreement
The personal guarantee and exactly who signed it
Any UCC-1 filing referenced alongside it

Terms like UCC-1 and personal guarantee are defined in the glossary, and the MCA default guide explains the sequence that usually precedes any filing.

If something has already been filed

Speak with an attorney licensed in your state right away. Court documents carry deadlines, and options for challenging a filing are time sensitive. Merchant Program Solutions is not a law firm and does not provide legal advice or representation.

If you are trying to avoid getting there

Owners in this position usually review whether restructuring, consolidation, or a settlement discussion is realistic based on actual revenue. The comparison on restructuring vs settlement is a useful starting point.

How Merchant Program Solutions fits in

Merchant Program Solutions is a marketing and referral company. We are not a lender, law firm, or financial advisor, and we do not provide legal, tax, accounting, or financial advice. We collect basic information about your situation and, where appropriate, refer it to independent service providers who are responsible for their own services, fees, terms, and requirements. No outcome, approval, or result is promised.

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Roughly how much MCA debt does the business have?

Or call 929-202-7005

This page is general information only and is not legal, tax, accounting, or financial advice. Every business situation is different.