The judgment was entered without your knowledge. Vacating it requires your action, your evidence, and your attorney. The court that entered the judgment without hearing from you will now hear from you.
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A confession of judgment entered in New York can be vacated — set aside — through a motion filed with the court that entered it. The motion asks the court to treat the judgment as if it never existed. If granted, the judgment is stricken, any liens based on the judgment are released, any restraining notices based on the judgment are dissolved, and the funder must pursue its claims through conventional litigation where you have the right to be heard, to present evidence, and to defend yourself.
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Vacatur is not automatic. The court will evaluate the motion, consider the funder’s opposition, and apply the legal standards governing the relief sought. The strength of the motion depends on the grounds asserted, the evidence presented, and the speed with which the motion is filed.
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Grounds for Vacatur
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The most common grounds for vacating a confession of judgment in the MCA context fall into several categories. Each category addresses a different deficiency in the judgment or the underlying transaction.
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Procedural defects under CPLR 3218. The statute governing confessions of judgment in New York requires specific formalities. The confession must be in writing. The affidavit must state the facts out of which the debt arose, the sum for which judgment may be entered, and that the amount is justly due or to become due. After the 2019 amendments, additional requirements apply: the affidavit must include specific factual allegations about the default, attach the underlying agreement, and provide a detailed calculation of the amount claimed. If any of these requirements are missing or deficient, the confession is procedurally invalid.
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Fraud or misrepresentation. If the MCA agreement was induced by fraud — if the broker or funder misrepresented the terms, the cost, the reconciliation rights, or the nature of the transaction — the confession of judgment embedded in that agreement was obtained through the same fraud. A judgment obtained through fraud is subject to vacatur under CPLR 5015(a)(3).
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The underlying agreement is void. If the MCA is recharacterized as a usurious loan under New York law, the entire agreement is void. A confession of judgment contained within a void agreement has no legal foundation. The funder cannot enforce a procedural mechanism embedded in a contract that does not exist.
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Jurisdictional defects. If your business is located outside New York, the 2019 amendments to the confession of judgment rules may render the filing jurisdictionally defective. The analysis depends on the nature of the transaction, the date of filing, and the specific provisions of the amended statute.
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(212) 300-5196Meritorious defense. Even if the procedural requirements were met, you can seek vacatur by demonstrating that you have a meritorious defense to the underlying claim — that the amount is wrong, that the default was invalid, that the agreement is unconscionable, or that the funder’s conduct warrants relief.
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The Process
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The motion to vacate is supported by an affidavit from the business owner. The affidavit details the facts: how the MCA was obtained, what representations were made, how the default was triggered, what the actual balance is, and why the judgment should not stand. The affidavit is the court’s window into what happened on the ground, outside the four corners of the contract. The attorney prepares a memorandum of law explaining the legal basis for each ground of vacatur, citing the applicable statutes and case law.
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The funder will oppose the motion. The opposition will argue that the confession was properly filed, that the debtor consented, that the amount is correct, and that the debtor’s defenses are without merit. The court may hold oral argument. Some courts decide the motion on the papers alone.
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If the court grants the motion, the judgment is vacated. Liens are released. Restraining notices are dissolved. The funder must then decide whether to pursue its claim through a conventional lawsuit, where the playing field is level.
Todd Spodek
Lead Attorney & Founder
Featured on Netflix's "Inventing Anna," Todd Spodek brings decades of high-stakes criminal defense experience. His aggressive approach has secured dismissals and acquittals in cases others deemed unwinnable.
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Timing and Emergency Relief
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There is no fixed statute of limitations for a motion to vacate under CPLR 5015, but delay weakens the motion. Courts consider whether the movant acted with reasonable diligence upon learning of the judgment. If a bank account freeze is the first notice, the motion should be filed within days, not weeks. If you knew the judgment existed and waited months before acting, the court will question the delay.
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If your bank account is restrained, the motion should include a request for emergency relief — an order to show cause with a temporary restraining order releasing the restrained funds pending the court’s decision on vacatur. Courts understand that a business with a frozen operating account is a business in freefall. The emergency relief is often the most time-sensitive component of the entire motion.
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An attorney who handles MCA confessions of judgment regularly can prepare and file the motion quickly, draft the affidavit with the specificity courts require, seek emergency relief on an expedited basis, and position the case for the strongest possible outcome.
For more on this topic, see Can You Sue Your MCA Company? When Litigation Makes Sense.
