The Legal Ground You’re Standing On
New Jersey MCA law: the three facts that shape every option
Every resolution strategy — renegotiation, settlement, defense, refinancing — plays out differently depending on these three pieces of New Jersey law. A firm that can’t speak to them isn’t the best firm for a New Jersey file.
1Usury limits & the recharacterization question
New Jersey's civil usury cap (N.J.S.A. 31:1-1 — 16% maximum contract rate) contains business exceptions broad enough that it rarely protects commercial borrowers. The meaningful backstop is criminal usury (N.J.S.A. 2C:21-19): above 30% per annum is criminally usurious for loans to individuals, above 50% for loans to corporations and LLCs — and charging over 50% is a second-degree crime. MCAs are structured as receivables purchases, but recharacterization risk is very real here: the NJ Attorney General's Yellowstone Capital enforcement alleged that fixed-payment MCAs were effectively loans at rates far above the usury limits, and the resulting consent order required $21.7 million in debt forgiveness. Yellowstone was a New Jersey-based funder — this state is where much of the industry's enforcement history actually happened.
Sources: N.J.S.A. 2C:21-19 (criminal usury — 30%/50%) · N.J.S.A. 31:1-1 (civil usury) · NJ OAG — $27.375M Yellowstone settlement (Jan. 2023)
2Confessions of judgment in New Jersey
Severely restricted in NJ courts New Jersey Court Rule 4:45-1 bars entering judgment by confession on a warrant of attorney contained in a payment instrument except on motion with notice served like a summons, and Rule 4:45-2 requires the creditor to file the original instrument plus an affidavit of true consideration and amount due — eliminating the surprise cognovit judgment MCA funders historically used. The caveat: a confessed judgment validly entered in another state can still be domesticated in New Jersey under full faith and credit. The 2023 Yellowstone consent order also specifically restricted that funder's use of confessions of judgment.
Sources: N.J. Court Rule 4:45 (judgment by confession) · NJ OAG — Yellowstone consent order (COJ restrictions)
3Commercial financing disclosure: where New Jersey stands
New Jersey has no commercial financing disclosure law in force as of mid-2026 — but it keeps trying. S1760, introduced January 2026, would require providers of sales-based financing to give TILA-style disclosures including finance charge, total repayment amount, payment schedule, fees, prepayment terms, and an estimated APR (exempting banks, transactions over $500,000, and low-volume providers). It follows S233 (2020), S819 (2022), and S1397 (2024), all of which died in committee. Until one passes, New Jersey merchants hold no statutory disclosure rights — notable in the state where Yellowstone was headquartered.
Sources: S1760 bill text (NJ Legislature, 2026) · deBanked — NJ reintroduces APR disclosure bill (Jan. 2026)
How funders actually enforce here: Funders typically sue in their contract-selected forum (often New York), then domesticate the judgment under New Jersey's Uniform Enforcement of Foreign Judgments Act (N.J.S.A. 2A:49A-25 et seq.): an authenticated copy is filed with the Superior Court Clerk, the debtor gets 14 days' notice to object — during which no execution may issue — and afterward the judgment enforces exactly like a New Jersey judgment, with levies on bank accounts and property through court officers. Funders also routinely perfect blanket UCC-1 liens filed and searchable through the NJ Division of Revenue and Enterprise Services. That 14-day objection window is short; a New Jersey business that receives a domestication notice should act within it, not after. NJ Judiciary — foreign judgment filing kit (N.J.S.A. 2A:49A-25 et seq.) · NJ Treasury DORES — UCC financing statements
