What States Allow Confession of Judgment?

Confession of judgment clauses are allowed in commercial contracts in roughly a dozen states, including Illinois, Maryland, Michigan, Minnesota, New Jersey, New York, Ohio, Pennsylvania, and Virginia. No state allows them in consumer loans, because the Federal Trade Commission’s Credit Practices Rule bans them in any credit agreement with an individual borrower for personal, family, or household use. Among the states that do permit them in business-to-business deals, the rules vary: some demand specific warning language, some restrict where the confession can be filed, and some require the authorization to sit in a separate document from the underlying note. A majority of states either void these clauses outright or restrict them so tightly they’re almost never used.

What a Confession of Judgment Does

A confession of judgment is a clause (or a separate signed document) in which you agree in advance to let a creditor obtain a court judgment against you without filing a lawsuit if you default. You waive the right to receive notice and the right to appear in court and argue your side. The creditor’s attorney files the confession with a court clerk, the clerk enters the judgment, and the creditor can immediately begin collecting through bank levies, wage garnishments, or property liens.

These clauses show up most often in business loan agreements, promissory notes, equipment financing contracts, commercial leases, and merchant cash advance deals. Because the FTC’s Credit Practices Rule classifies any confession of judgment in a consumer credit contract as an unfair act or practice under 16 CFR 444.2, the entire question of which states allow them is a business-to-business question.1eCFR. 16 CFR 444.2 – Unfair Credit Practices If you’re borrowing as a sole proprietor, LLC, or corporation, the federal rule doesn’t protect you, and state law controls whether the clause is enforceable.2Congressional Research Service. Agreeing in Advance to Lose – Legal Considerations in Regulating Confessions of Judgment

States That Allow Confessions of Judgment

The following states authorize confessions of judgment in commercial contexts by statute or court rule. Each has its own procedural catch, and consumer transactions are excluded in all of them.

Illinois

Illinois allows any person with a bona fide debt to confess judgment without process. The confession must be filed in the county where the note was executed, where a defendant resides, or where the defendant owns property; a judgment filed anywhere else has no force. Illinois independently bans confessions of judgment in consumer transactions for any instrument signed after September 24, 1979.3Illinois General Assembly. 735 ILCS 5/2-1301

Ohio

Ohio permits what it calls “warrants of attorney to confess,” but imposes one of the strictest notice requirements in the country. The instrument must include a conspicuous warning, printed in type that stands out more than anything else on the page, directly above or below the signature line. The warning must read: “By signing this paper you give up your right to notice and court trial. If you do not pay on time a court judgment may be taken against you without your prior knowledge.” Without that exact warning, the confession is invalid and no judgment can be entered on it.4Ohio Legislative Service Commission. Ohio Revised Code Section 2323.13 – Warrant of Attorney to Confess

Pennsylvania

Pennsylvania allows confessions of judgment in commercial transactions through Chapter 2950 of its Rules of Civil Procedure. The rules explicitly exclude any instrument “executed by a natural person in connection with a consumer credit transaction,” and the complaint entering the judgment must include a sworn statement that the judgment is not being entered against a natural person in a consumer deal.5Pennsylvania Code and Bulletin. Pennsylvania Code Chapter 2950 – Confession of Judgment for Money Pennsylvania creditors routinely use the device in commercial lending and landlord-tenant disputes.

Virginia

In Virginia, a debtor can confess judgment in the clerk’s office of any circuit court, whether or not a lawsuit is pending. The clerk enters it in the order book, and the judgment carries the same force as one entered by a judge after trial.6Virginia Code Commission. Code of Virginia Title 8.01 – Judgments by Confession

Michigan

Michigan allows judgments to be entered in circuit court on a plea of confession signed by an attorney, even without a pending suit. The authorization to confess must be in a document separate from the underlying contract, bond, or promissory note. That separate authorization has to be produced to the officer signing the judgment and filed with the court clerk.7Michigan Legislature. MCL Section 600.2906

Minnesota

Minnesota allows a judgment to be entered “by confession and without action” in district court. The debtor files a verified, signed statement authorizing entry for a specific dollar amount. For existing or future debts, the statement must lay out the facts behind the debt and confirm the amount is justly due. The resulting judgment is final, and unless a stay is specifically arranged, the creditor can execute immediately.8Minnesota Office of the Revisor of Statutes. Minnesota Statutes Chapter 548 – Confession of Judgment

Maryland

Maryland permits confessions of judgment in commercial transactions but classifies their use in consumer deals as an unfair or deceptive trade practice under the state’s Consumer Protection Act.9Maryland General Assembly. Maryland Code Commercial Law 13-301 – Unfair, Abusive, or Deceptive Trade Practices Defined

New Jersey

New Jersey authorizes judgment by confession through court rule (Rule 4:45).

New York

New York allows confessions of judgment under CPLR 3218. A creditor’s attorney submits the confession with a sworn affidavit, and the county clerk accepts the statement at face value and enters the judgment without reviewing whether the default actually occurred. Before 2019, filings could be made in virtually any county, which turned New York into the collection engine for the merchant cash advance industry. The 2019 reform (S6395) restricts filing to the county where the defendant resided when the affidavit was executed or resides at the time of filing; for a business entity, residence means any county where it has a place of business.10New York State Senate. New York Civil Practice Law and Rules 3218 – Judgment by Confession The practice of dragging out-of-state borrowers into unrelated New York counties largely ended, but New York businesses remain fully exposed.

States That Ban or Void Confessions of Judgment

A majority of states refuse to enforce these clauses. In some, any judgment entered on one is void from the start.

Georgia, Alabama, Mississippi, and several other states carry outright or near-total bans. The practical effect is the same across the group: a confession of judgment clause in a contract governed by one of these states’ laws is unenforceable.

Why Your State’s Ban May Not Protect You

Being in a state that bans confessions of judgment isn’t a complete shield. Commercial contracts routinely include choice-of-law and forum-selection clauses that specify a permitting state (frequently New York or Pennsylvania) as the governing jurisdiction. If you signed a loan or MCA agreement consenting to jurisdiction there, the creditor can file the confession in that state and then register the resulting judgment in your home state for enforcement. The 2019 New York reforms narrowed this somewhat, but didn’t eliminate it. Read any jurisdiction clause carefully before signing a commercial loan document, because that clause can route around the protections your state would otherwise give you.

Merchant Cash Advances

Merchant cash advance agreements are the most common place business borrowers encounter confession of judgment clauses today. An MCA company advances cash to a small business in exchange for a percentage of future sales, and buried in the paperwork is a separate power of attorney authorizing the company to confess judgment on your behalf if you default. “Default” can be defined broadly enough that a single slow week of sales triggers it.

Once the MCA company decides you’ve defaulted, it files the confession in whatever jurisdiction the contract specifies. A clerk enters the judgment. For most borrowers, the first sign of trouble is a frozen bank account. From there, the MCA company can garnish accounts, levy assets, place liens, and tack on interest, legal fees, and enforcement costs that push the total well beyond the original advance.

Challenging a Confession of Judgment After Entry

Getting a confession of judgment set aside is difficult but not impossible. Courts have vacated these judgments on several grounds:

  • Fraud or misrepresentation in obtaining your signature, or false statements in the sworn affidavit about the default or amount owed.
  • Procedural defects, such as missing Ohio’s mandatory warning language or Michigan’s separate-document requirement. A judgment that doesn’t meet the state’s specific requirements may be void from the start.
  • No valid underlying debt, or an amount in the confession that doesn’t match what was actually owed.
  • Lack of authority in the person who signed the confession, or a defective power of attorney.

The procedural path depends on the state. In some, you file a motion to vacate. In others, particularly when the facts are disputed, you have to file a separate plenary action to set the judgment aside. Speed matters, because creditors begin enforcement immediately and a challenge doesn’t automatically stop collection. You’ll usually need to ask the court for a stay while the challenge proceeds. For any commercial loan or MCA agreement that contains one of these clauses, a legal review before you sign costs a fraction of what it costs to unwind a judgment after a marshal shows up to levy your accounts.