6 Signs Your MCA Funder Is About to File a Confession of Judgment Against You

The filing happens without you. That is the entire point.

A confession of judgment is not a lawsuit. It is the absence of one. You signed a document, probably on the same afternoon you signed everything else, that authorized the funder to walk into a courthouse and obtain a judgment against you and your business without a complaint, without a hearing, without notice, and without the inconvenience of allowing you to respond. By the time you discover what happened, the judgment is entered and your bank account is frozen. This is not a procedural accident. It is the designed outcome of the clause.

In 2019, New York restricted confessions of judgment for out-of-state merchants. The practice remains legal for businesses operating within the state. And for merchants everywhere, the signs that a filing is imminent follow a pattern that, once you recognize it, is difficult to misread.

The Funder Stops Calling

This is the sign most business owners misinterpret. After days or weeks of aggressive collection calls, the phone goes quiet. The emails cease. The funder, who was relentless in pursuing a resolution, suddenly has nothing to say.

Silence from a creditor is not mercy. It is preparation.

When the calls stop, the matter has typically moved from the collections department to the legal department. The funder has determined that negotiation is no longer the preferred path and has begun assembling the affidavit of default required to file the confession of judgment. In our experience, the gap between the last collection call and the filing is ten to twenty-one days. Sometimes less.

Multiple ACH Withdrawals Fail in a Compressed Window

The funder needs to establish default, and the contract defines default as a failure to remit payment. Each failed ACH attempt is documented. Each generates a record. The funder does not need many. In some agreements, a single failure is sufficient. In others, three consecutive failures within a specified period.

But here is the pattern: if the funder begins attempting withdrawals more frequently than the contract specifies (daily instead of weekly, or multiple times per day), they may be manufacturing a documentation trail for the affidavit. Seven of the contracts we reviewed in the past six months authorized the funder to attempt withdrawal at any time, not merely on the scheduled dates. That authorization turns your account into a testing ground for default.

The withdrawals were not intended to collect. They were intended to fail.

The Funder Requests Updated Financial Information

An MCA funder that suddenly asks for your most recent bank statements, tax returns, or accounts receivable aging report is not conducting a wellness check. They are assessing whether your assets justify the cost of enforcement.

A confession of judgment is only valuable if there is something to seize. Before filing, the funder (or, more precisely, the funder's attorney) evaluates whether your bank accounts hold sufficient funds to justify a restraining notice, whether your business assets are worth pursuing, and whether your personal guarantee is backed by assets the judgment can reach. The information request is the appraisal that precedes the seizure.

If you receive this request after you have already fallen behind on payments, the purpose is not reconciliation. It is reconnaissance.

Your Contract Contains a New York Choice of Law Provision