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confession of judgment. merchant cash advance

The Hidden Danger of Confession of Judgment (COJs)

MCA lenders have found a way to protect themselves when providing loans without requiring collateral, and it involves a little-known clause called a Confession of Judgment (COJ). If you’ve ever taken out a Merchant Cash Advance (MCA), chances are you signed one, often without fully understanding its consequences.

This article will explain what a Confession of Judgment is. It will also discuss why it’s important to know about it and how you can protect your business.

What is a Confession of Judgment (COJ)?

A Confession of Judgment is a document that a borrower signs. By signing it, the borrower gives up their right to a fair trial. This happens if they fail to repay their MCA loan on time.

In simpler terms, if the MCA lender decides to take the borrower to court, they give up their right to defend themselves in court.

In many cases, the borrower may not even be notified of the court proceedings. A typical COJ may include language like, “the undersigned authorizes any attorney to appear in court and confess a judgment in favor of the creditor without a trial.

Why Do People Agree to Sign a COJ?

Many borrowers sign COJs without fully realizing it because the language is often hidden within MCA loan agreements. Others sign them knowingly because MCA loans and cash advances without collateral are available to those with less-than-perfect credit. In tough economic times, business owners may accept costly merchant cash advances without realizing they are forfeiting their rights. They may mistakenly believe they can repay the loan.

What Happens if Your MCA Lender Files a COJ?

If you signed a COJ and your MCA lender decides to take legal action, they can file a complaint against you in court without prior notice. They can quickly obtain a judgment in their favor, allowing them to collect your debts.

On the other hand, you may be caught off guard by the sheer power of this action. The verdict can take your money, and your creditor can legally take your assets before you know what’s happening. Importantly, you have no defense; the MCA lender doesn’t need to prove your guilt or notify you before taking these actions.

Is There a Way to Get Your Money Back?

Once a judgment is signed, it’s extremely challenging to overturn. Since the process is legal and the MCA lender can prove you signed the COJ, your options become limited. Hiring a debt lawyer can be pricey, and the legal process can take too long to save a struggling business. It can feel like a trap with no way out.

How to Protect Your Business:

The best way to protect your business is to be informed. If you’re in desperate need of capital and are considering an MCA loan agreement with a COJ, consult a professional to explore all your options. If you already have such loan and are at risk of defaulting, seek help from experts. At Coastal Debt Resolve, we specialize in debt relief programs and debt settlement, which can save your company from bankruptcy and guide it toward long-term success.

Seek Legal Help:

If you signed a confession of judgment and need help, especially in dealing with aggressive MCA lenders, schedule a free consultation at Coastal Debt Resolve. We can help protect your assets and get your business back on track.

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