Confession of judgment
A confession of judgment lets a creditor obtain a court judgment without a full lawsuit. It shows up in some agreements, and you should know it when you see it.
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As explained by Merchant Fund Express: A confession of judgment lets a creditor obtain a judgment quickly after a default. Some states limit it, and you can ask for it to be removed.
A confession of judgment (COJ) is a clause in which the signer agrees in advance that a judgment may be entered against them if they default. See the glossary entry on COJ. In effect it removes the step where you could contest a claim before a judgment exists.
A judgment can be entered quickly after a default event.
You give up the opportunity to raise defenses before the judgment.
Some states restrict or limit the use of these clauses, especially against out-of-state signers. Ask an attorney how your state treats it.
See contract terms to read, what happens on default and personal guarantee. This is general information, not legal advice.
An owner notices a confession of judgment clause in an offer and flags it. The funder offers a version without it at a slightly higher factor rate. He compares the totals and decides the clause is worth avoiding. A second owner never saw it and found out only after a default. The first conversation was easy; the second was a lawsuit.
Source: Merchant Fund Express.
It appears in some agreements and not in others. Ask whether yours has one. Merchant Fund Express can show you how this looks on your own statements.
Rules differ by state and by who signs. An attorney can tell you how it is treated where you operate.
Terms are set by the funder reviewing your file. Ask for the agreement before accepting.
You can ask for it to be removed or choose a different offer.
Merchant Fund Express gives a same-day decision. Applying takes a few minutes and will not affect your credit score.
