A confession of judgment is signed at closing and held until the funder claims a default. It can then be filed with a court clerk to enter a judgment quickly, without the usual lawsuit, notice and chance to defend. With a judgment in hand, a creditor can move to freeze or collect from bank accounts.
New York changed its rules in 2019. A confession of judgment can now be filed only in the county where the defendant lived or, for a business, had a place of business, so a business with no New York location can no longer have one entered there. Virginia makes confession of judgment provisions in sales-based financing contracts unenforceable.
Regulators have acted too. A 2022 FTC order banned Richmond Capital and its owner from merchant cash advances and required them to vacate judgments against former customers. If a contract includes a confession of judgment, ask for it to be removed or get legal advice before you sign. This is general information, not legal advice.
Sources
- N.Y. CPLR § 3218. Judgment by confession — New York State Senate (checked 2026-09-30)
- Code of Virginia § 6.2-2234 — Virginia General Assembly (checked 2026-09-30)
- FTC Action Results in Ban for Richmond Capital and Owner From Merchant Cash Advance and Debt Collection Industries and Return of More Than $2.7M to Consumers (June 6, 2022) — Federal Trade Commission (checked 2026-09-30)