A confession of judgment was filed against your business.

A confession of judgment is a money judgment a county clerk enters on an affidavit you signed in advance, with no lawsuit, no service, and no hearing. It can be attacked. The live routes are residency under CPLR 3218 as amended in 2019, a defective affidavit, fraud, and CPLR 5015. The ground you pick dictates the vehicle.

What is a confession of judgment, and how did one get entered against your business without a lawsuit?

A confession of judgment is a sworn affidavit in which the defendant authorizes entry of a money judgment before any default occurs. CPLR 3218 allows that judgment to be entered without an action. No summons is served. No complaint is filed. No judge weighs the merits. A county clerk performs a ministerial act and enters the sum confessed.

You signed it at closing, in the same stack as the merchant agreement and the guaranty. The funder held it, then filed it when it decided you had defaulted, and the clerk entered judgment for the confessed sum.

Law: CPLR 3218(a), (b).

What happens next is why you are reading this at 2am. Entry with the county clerk creates a lien on real property you own there. Restraining notices go to your banks. A sheriff, or a New York City marshal, can levy.

Check two statutory limits first. The affidavit may be filed only within three years after execution, and no judgment by confession may be entered after the defendant’s death.

Law: CPLR 3218(b).

Why did the merchant cash advance funder require a confession of judgment?

Because the instrument converts a disputed commercial claim into an enforceable judgment in days, without proving anything. The funder skips the complaint, the answer, discovery, and motion practice, and goes straight to the bank freeze. Applied to out-of-state small businesses, that leverage is what provoked the 2019 legislative response.

Understand the structure, because it drives the defenses. The advance is documented as a purchase of future receivables, not a loan, and the paper says the funder carries the risk of your business failing. Whether that is true in your agreement is a question of fact.

The 2019 amendment to CPLR 3218 was signed on August 30, 2019, to stop New York confessions of judgment against debtors with no connection to New York. It is not retroactive. It governs affidavits executed on or after that date, so your execution date is the first thing to fix.

Were you a New York resident when you signed the affidavit of confession of judgment?

Residency is the first question in every post-amendment case. CPLR 3218(b) permits the affidavit to be filed only with the clerk of the county where your affidavit stated you resided when you executed it, or where you resided at the time of filing. If neither is a New York county, the clerk had nothing to act on.

Law: CPLR 3218(b).

Apply that to the typical out-of-state merchant. You run a business in New Jersey, Florida, or Texas. You never lived in New York. The affidavit named a New York county because the funder’s counsel drafted it that way. That designation alone no longer carries the filing.

Two qualifications matter before you celebrate. A non-natural person resides in any county where it has a place of business, so one New York office can supply a filing county for your entity. The statute also exempts government agencies. And the word is resides, not domiciled. A New York apartment kept on the signing date will be used against you.

Timing controls which version governs. Under the former statute, the clerk of the county designated in the affidavit could enter judgment against a nonresident, and a pre-amendment confession is still measured by that older rule.

Case: Funding Metrics, LLC v A & A Fabrication & Polishing Corp., 2020 NY Slip Op 05724 (2d Dept 2020).

Be careful with the vehicle. Courts have entertained no-authority challenges by motion, because a clerk acting outside CPLR 3218 had no power to act. But in that same appeal the remaining grounds went to a plenary action. The motion route is contested, not settled.

A clerk is not a court. The clerk’s power comes entirely from CPLR 3218. Step outside the statute and the entry rests on nothing. You still have to say so in the right vehicle.

What must the affidavit of confession of judgment actually say?

CPLR 3218(a) sets the content, and the requirements are specific. The affidavit must be executed by the defendant. It must state the sum for which judgment may be entered. It must authorize entry. It must state the county of residence. For money due, it must do more than recite a number.

• The sum for which judgment may be entered, and an authorization to enter it.
• The county where the defendant resides.
• For money due or to become due, a concise statement of the facts out of which the debt arose, showing the sum confessed is justly due or to become due.
• Where the confession secures the plaintiff against a contingent liability, a concise statement of the facts constituting that liability, showing the sum confessed does not exceed it.

Law: CPLR 3218(a).

Compare that list to your affidavit line by line. Many of these affidavits recite a bare conclusion that a sum is owed. The Second Department has held that an affidavit without facts explaining why the debtor was indebted does not comply with CPLR 3218(a)(2). The movant there was a court-appointed receiver, not the signer.

Case: Cole-Hatchard v Nicholson, 73 AD3d 834 (2d Dept 2010).

Can you attack the defective affidavit yourself, or does only a creditor get to?

Standing is the trap here. New York courts have repeatedly held that the specificity requirement of CPLR 3218(a)(2) protects a defendant’s other creditors, who could be prejudiced by a collusively confessed judgment. It was not written to protect the defendant. That limits what you, as the signer, can argue.

Cases: Giryluk v Giryluk, 30 AD2d 22, 25 (1st Dept 1968), affd 23 NY2d 894 (1969); County Natl. Bank v Vogt, 28 AD2d 793 (3d Dept 1967), affd 21 NY2d 800 (1968).

The First Department applied that principle against a judgment debtor, holding the debtor lacked standing to challenge the affidavit. The Second Department affirmed a denial of vacatur on the same reasoning, holding a defendant foreclosed from attacking a confession for want of CPLR 3218(a)(2) specificity.

Cases: Cash & Carry Filing Serv., LLC v Perveez, 149 AD3d 578 (1st Dept 2017); Balahtsis v Shakola, 197 AD3d 546 (2d Dept 2021).

The point is real but narrow. Third-party creditors have raised non-compliance by motion, and a receiver has been held to have standing to seek vacatur for other creditors. If you signed, it is a supporting argument, not your spine.

The specificity rule in CPLR 3218(a)(2) was written to protect your other creditors, not you. Read that twice before you build an entire motion on it.

Do you file a motion to vacate or start a new lawsuit?

Choosing the wrong vehicle loses the motion on procedure alone. The general rule is that a person seeking to vacate a judgment entered on an affidavit of confession must commence a separate plenary action. Motions get denied without reaching the merits. The exceptions are narrow, and knowing them is everything.

Case: Regency Club at Wallkill, LLC v Bienish, 95 AD3d 879 (2d Dept 2012).

The Second Department has enforced that rule against merchants attacking confessed judgments, reversing trial courts that granted relief by motion and sending the merchants to a plenary action.

Cases: Merchant Funding Servs., LLC v Volunteer Pharm., Inc., 179 AD3d 1051 (2d Dept 2020); QFC, LLC v Iron Centurian, LLC, 179 AD3d 1110 (2d Dept 2020); Last Chance Funding, Inc. v Tom Agler Livestock, LLC (2d Dept, Mar. 26, 2025).

What if the funder lied to get your signature?

Fraud in the inducement means someone deliberately lied to you about a material fact, you reasonably relied on it, and you signed because of it. In a merchant cash advance, the lie is usually about true cost, a real reconciliation right, the fee structure, or a promise that the affidavit would never be filed.

Rule first. A confession of judgment rests on a contract, and a contract procured by fraud is vulnerable. Application second. Proof of what was said, by whom, and when lives outside the affidavit. Consequence third. Fraud belongs in a plenary action.

A related attack is authority. If the person who signed for the company could not bind it, that is a plenary claim. The First Department noted authority supporting that theory, but did so while dismissing the debtor’s complaint. Treat it as framing, not a holding for you. That decision also restates that courts keep inherent discretionary power to vacate on grounds outside CPLR 5015(a). Discretionary means you cannot demand it.

Cases: Wansdown Props. Corp., N.V. v Azari (1st Dept 2018); Woodson v Mendon Leasing Corp., 100 NY2d 62, 68 (2003).

Does CPLR 5015 apply to a confession of judgment?

Partly, and less cleanly than you would hope. CPLR 5015(a) lets the court that rendered a judgment relieve a party from it for excusable default, newly discovered evidence, fraud or misconduct of an adverse party, lack of jurisdiction, or reversal of a prior judgment. No court rendered your confessed judgment, which is one reason these motions draw plenary-action rulings.

Law: CPLR 5015(a)(1) through (5).

Two features matter. The excusable default ground carries a one-year clock, running from service of the judgment with written notice of entry, or from entry where the moving party entered it. The fraud ground under CPLR 5015(a)(3) has no express one-year limit, though courts require a motion within a reasonable time.

Now the caution. Invoking CPLR 5015 does not excuse you from the plenary action requirement. Appellate courts have reversed vacatur orders where the grounds fell outside a recognized exception. Pick the ground first. Then the vehicle it permits.

Was the merchant cash advance actually a usurious loan?

It may have been, and that defense reaches the transaction itself rather than only the judgment. The threshold question is whether the agreement was a true purchase of receivables or a disguised loan. If repayment is absolute rather than contingent, it looks like a loan, and criminal usury under Penal Law 190.40 is live.

The Second Department has set out the factors courts weigh. Whether the agreement has a reconciliation provision. Whether it has a finite term. Whether the funder has recourse in bankruptcy. No single factor decides it, and a reconciliation clause the funder may honor at its sole discretion has been treated as pointing toward a loan.

Case: LG Funding, LLC v United Senior Props. of Olathe, LLC, 181 AD3d 664 (2d Dept 2020).

Know the limits of the weapon. Penal Law 190.40 sets the criminal usury standard at a rate above 25 percent per year. A corporate borrower may interpose criminal usury as a defense under General Obligations Law 5-521(3), but that subdivision is a shield, not a sword.

Law: General Obligations Law 5-521(3); Penal Law 190.40.

What should you do this week?

Work the paper you already have, in order, before anyone files anything. A confessed judgment keeps operating against your accounts until a court stops it. The response is not a phone call to the funder. It is a documented, ground-specific attack filed in the right vehicle.

• Pull the affidavit and read the county it names. Then pull the merchant agreement and guaranty signed that day.
• Fix two dates. Execution and filing. They control which version of CPLR 3218(b) applies and whether the three-year window closed.
• Prove where you resided on both dates, and list every New York location your entity used. Driver license, lease, tax returns.
• Reconcile the confessed sum against every ACH debit taken. Overstatement is its own problem.
• Read the reconciliation clause. Mandatory or discretionary, finite term or not, what happens on bankruptcy.
• Preserve what the funder or its broker sent before signing. Emails, texts, term sheets. That is the raw material of a fraud claim.
• Move before a restraining notice becomes a levy.

Then make the call that decides the case. If your best ground is that the clerk had no statutory authority, a motion may be available and it is fast, but expect a fight over the vehicle. If your ground is fraud, duress, or usury, a plenary action is almost certainly required. Prencipe International handles that analysis before the wrong paper goes in.