Business Debt Restructuring in Ohio: 7 Laws That Change Your Leverage (2026)

The One Paragraph of Ohio Law That Costs Ohio Owners the Most

Almost every state killed the confessed judgment in commercial contracts decades ago, or never allowed it, or restricted it so tightly that funders quit using it. Ohio did something narrower. In 1974 the legislature made a warrant of attorney invalid in a consumer loan or a consumer transaction and required a specific block of warning text in every other one, and then stopped. The result is that a warrant of attorney signed by your LLC on a business advance is still capable of producing a judgment against you before a summons is ever served, and the reason most Ohio owners have never heard of that is simply that nobody explains a cognovit clause at signing.

That single feature reorders everything else. A funder holding enforceable Ohio cognovit paper is not negotiating from the same position as a funder that has to sue you, wait out an answer, and take its chances on a motion. It can convert the file into a judgment in a week and start on your bank in the week after. So the honest starting point for an Ohio restructuring is not what the advance cost. It is whether the document you signed carries a warrant of attorney and whether that warrant complies with the statute, because a defective one is worth nothing to the creditor and the defect is often visible on the page.

The other six run from the paper to the money: what Ohio does and does not do about rate, what it never enacted about disclosure, how far back a creditor reaches for transfers, how fast the garnishment chapter moves, which unfair practices statute your company can use, and what your exemptions look like once a guaranty puts your own name on the judgment.

1. The Warrant of Attorney Sitting Above Your Signature

A warrant of attorney to confess judgment is a clause appointing any attorney the creditor chooses to walk into court, admit your liability for you, and take a judgment without notice to you. Ohio Rev. Code §2323.13(D) makes one invalid, and strips the court of authority to render judgment on it, unless warning language appears on the instrument directly above or below the signature space in type or marking that stands out more clearly and conspicuously than anything else on the document. The required text opens with the words “Warning: By signing this paper you give up your right to notice and court trial,” and it goes on to say that a judgment may be taken without your prior knowledge and that the powers of a court can be used to collect from you regardless of any claims you have against the creditor.

Subsection (E) is where Ohio parts company with most of the country. It voids a warrant of attorney only where the instrument arises out of a consumer loan or a consumer transaction, and the section defines both narrowly: a consumer loan runs to a natural person for a personal, family, educational or household purpose, and a consumer transaction is a transfer of goods, services, a franchise or an intangible to an individual for those same purposes. An advance to your operating company is neither. From the funder’s side of the table that is the entire appeal. Cognovit paper turns a contested collection matter into a filing clerk’s errand, which is why an Ohio file with a valid warrant gets priced very differently inside a funder’s recovery model than the same file in a state that outlawed the device.

Subsection (A) still limits where the confession can happen, and the limit is not waivable. If the maker, or any one of several makers, lives inside the territorial jurisdiction of a municipal court or signed the warrant inside that territory, judgment must be confessed in that municipal court notwithstanding any agreement to the contrary, provided it has subject matter jurisdiction; otherwise the confession goes to a court in the county where the maker resides or signed. The confessing attorney has to produce the warrant to the court at the time of the confession and file the original or a copy with the clerk, and under subsection (B) the creditor’s attorney has to state the defendant’s last known address in the petition.

Subsection (C) is your only warning system and it fires late: immediately upon entry the court must notify you by personal service or by registered or certified letter sent to the address in the petition, and that letter is frequently the first thing an owner sees. When it arrives, the questions worth asking are whether the warning block sat where §2323.13(D) requires and looked the way the statute requires, whether the confession was filed in a court §2323.13(A) permits, and whether the debt was properly accelerated before the amount was confessed. Those are vacatur arguments on a short clock, and they belong with an Ohio litigator the same day. Our page on what happens when the suit names you personally covers the guaranty side of the same problem.

2. Eight Percent, and the Two Doors That Lead Around It

Ohio’s written contract rate ceiling sits at Ohio Rev. Code §1343.01(A), which lets parties to a bond, bill, promissory note or other written instrument for the forbearance or payment of money stipulate for interest at any rate not exceeding eight percent per annum payable annually. Read alone that looks like the most protective usury statute in this article. Read with subsection (B) it very rarely reaches a business advance, because subsection (B) lists six situations in which any party may agree to more, and two of them describe your deal.

The first is §1343.01(B)(1), which lifts the cap whenever the original principal indebtedness stated in the instrument exceeds one hundred thousand dollars. The second is §1343.01(B)(6)(a), the business loan exemption, which reaches a loan to a business association or partnership, a person owning and operating a business as a sole proprietor, joint venturers, tenants in common operating a business, any limited partnership, or a trustee who owns or operates a business, with “business” defined in (B)(6)(b) as a commercial, agricultural or industrial enterprise carried on for investment or profit. There are two carve-outs worth knowing: under (B)(6)(a)(i) a loan secured by an assignment of an individual obligor’s wages, commissions or other compensation, or by household goods, is not treated as a business loan, and under (B)(6)(a)(ii) including the obligor’s residence among business collateral does not disqualify the exemption.

All of that presupposes a loan, which is why the fight over an Ohio advance starts one step earlier than the rate. If your agreement is a genuine purchase of future receivables, with real risk on the funder and a reconciliation provision that actually operates, then §1343.01 has nothing to say about it at all. If the reconciliation clause is decorative and the repayment obligation is absolute, the recharacterization argument is the door to every other remedy, and the reconciliation record is the evidence. We treat the denial patterns in detail on why funders deny reconciliation requests.

One number does follow you after a judgment. Under §1343.03(A) the creditor takes interest at the rate determined under §5703.47 unless a written contract fixes a different rate, in which case the contract rate applies, and under §1343.03(B) the rate in effect on the date judgment is rendered stays in effect until the judgment is satisfied. A funder that wrote a high default rate into the agreement will try to carry it onto the judgment, and a judgment that accrues at a contract rate for several years is a materially larger number than the one that was entered.

3. Nothing in the Revised Code Tells Your Funder What to Show You

As of August 2026, eleven United States jurisdictions have enacted a commercial financing disclosure or broker statute, and Ohio is not among them. No Ohio law requires a funder to hand your business a page stating the amount financed, the amount disbursed after fees, the total repayment, the finance charge or an estimated annual percentage rate. No Ohio agency licenses or registers small business finance providers or the brokers who place their paper. There is no Ohio complaint line for a funding disclosure, because there is no Ohio disclosure to complain about. Anyone who tells you a missing disclosure voids your Ohio advance is describing New York, California or Virginia law and has not checked whether it travels.

That absence is worth understanding rather than mourning, because it changes what your file is built on. In a disclosure state a negotiator can open with a regulatory defect the funder would rather not have documented. In Ohio the leverage has to come from the four corners of the agreement and the transaction record: whether the contract is a sale or a loan on its own terms, whether the reconciliation obligation was honored, whether the UCC-1 was filed and where it sits in priority, whether the broker took money before funding, whether the payoff letters on the earlier positions match what was actually disbursed, and whether the default and acceleration provisions were followed before the balance was declared due.

It also means the state comparison matters more here than it does elsewhere, because your agreement almost certainly names another state’s law. A choice of law clause pointing at New York can bring the disclosure regime in New York Financial Services Law article 8 into the conversation about a transaction an Ohio business signed, and it can also bring New York’s criminal usury line with it. Whether an Ohio court honors that clause on any given issue is a question for Ohio counsel and not a foregone conclusion. Our state by state map of commercial financing disclosure laws shows exactly which eleven jurisdictions have one and what each requires.

4. Chapter 1336 Still Says Fraudulent, Not Voidable

Half the country renamed this body of law when it adopted the 2014 revisions, and the vocabulary is a fast way to tell whether your adviser has read the right statute. Ohio Rev. Code chapter 1336 is titled the Ohio Uniform Fraudulent Transfer Act and still speaks of a transfer being fraudulent as to a creditor. A memo about voidable transactions citing sections in the 39-23 range or the 270s is describing North Carolina or New York, not the chapter an Ohio judge applies to what you moved out of the company last spring.

The two tests live in §1336.04(A). Paragraph (1) reaches a transfer made or obligation incurred with actual intent to hinder, delay or defraud any creditor, and it reaches creditors whose claims arose before the transfer or within a reasonable time not exceeding four years afterward. Paragraph (2) needs no intent at all: no reasonably equivalent value received, plus either remaining assets unreasonably small for the business you were about to engage in or debts you believed you could not pay as they came due. Subsection (B) then lists eleven factors a court may weigh on intent, and the eleventh is specific enough to be worth quoting in substance, because it captures a pattern this industry sees constantly: whether the debtor transferred the essential assets of the business to a lienholder who transferred them to an insider of the debtor.

Section 1336.05 adds the creditor-existed-first versions. Subsection (A) reaches a transfer for less than reasonably equivalent value while the debtor was insolvent or was made insolvent by it, and subsection (B) reaches a transfer to an insider on an antecedent debt where the debtor was insolvent and the insider had reasonable cause to know it. Paying yourself back on an old shareholder loan while the advances go unpaid is exactly the §1336.05(B) fact pattern, and it carries the shortest deadline in the chapter.

The remedies at §1336.07(A) run from avoidance of the transfer to the extent needed to satisfy the claim, to attachment or garnishment against the transferred asset or other property of the transferee under chapters 2715 and 2716, to an injunction against further disposition, to appointment of a receiver. None of that is a reason to freeze in place, and it is not a reason to reorganize quietly either. It is the reason every asset move contemplated during an Ohio workout gets dated, valued and papered by counsel before it happens rather than explained afterward.

5. How Fast Chapter 2716 Reaches the Operating Account

Ohio runs garnishment on two separate tracks and the difference decides how much warning you get. Under §2716.01(A) a judgment creditor may garnish personal earnings only through a proceeding in garnishment of personal earnings, and under §2716.01(B) it may garnish other property held by someone other than you only through a proceeding in garnishment of property other than personal earnings. Your business bank account, your merchant processor’s reserve, and money your customers owe you all sit on the second track, which is the faster of the two.

The wage track has a built-in warning. Section 2716.02 requires the creditor to make a written demand for the amount above what is exempt, delivered by personal service through the court, by certified mail return receipt requested, or by regular mail with a stamped certificate of mailing, and that demand must go out at least fifteen days and not more than forty-five days before the order is sought. If you receive one of those notices, the clock it starts is the last quiet interval you get, and it is the moment to call counsel rather than the moment to ignore the envelope.

The property track carries no comparable advance demand. On the filing of a garnishment of property other than personal earnings, §2716.13(A) requires the court to set the matter for hearing within twelve days, and §2716.13(B) requires the clerk to issue three copies of the order and the notice to answer for service on the garnishee no later than seven days before that hearing date. The order binds property in excess of four hundred dollars, other than personal earnings, in the garnishee’s possession at the time of service, and a garnishee that acts in good faith on an order received by ordinary mail is protected from damages. Twelve days from filing to hearing, with the bank bound at service, is why an Ohio funder that already holds a judgment does not need to negotiate on your timetable, and why the useful work happens in the weeks before a judgment rather than the days after one.

Two more mechanics belong in the same picture. Section 2333.09 entitles a judgment creditor, on an affidavit that the judgment is unpaid, to an order requiring you to appear and answer about your property, income and other means of satisfying it. And §2329.02 makes a judgment a lien on your lands in any Ohio county from the moment a certificate of judgment is filed with that county’s clerk of common pleas, which is how one judgment quietly attaches to real estate three counties from where the case was filed.

6. Ohio Has Two Unfair Practices Statutes and Your Company Only Reaches One

Owners hear about the Consumer Sales Practices Act and assume it covers them. It does not, and the exclusion is in the definition rather than in an exemption anyone has to plead. Ohio Rev. Code §1345.01(A) defines a consumer transaction as a sale, lease, assignment, award by chance or other transfer of goods, a service, a franchise or an intangible to an individual for purposes that are primarily personal, family or household. A merchant cash advance to your staffing company is a transfer to an entity for a commercial purpose, so the CSPA is closed before the analysis starts. That is the single most common misunderstanding we hear from Ohio callers.

The statute that is open is the Deceptive Trade Practices Act in chapter 4165. Section 4165.01(D) defines “person” to include a corporation, a partnership, a limited liability company and other commercial entities, so your business has standing on its face. Section 4165.02(A) then lists thirteen deceptive trade practices committed in the course of a person’s business, including representing that services have characteristics or benefits they do not have, representing that services are of a particular standard or quality when they are of another, disparaging another’s business by false representation of fact, advertising with intent not to sell as advertised, and making false statements about the reasons for or amounts of price reductions. Section 4165.02(B) removes an obstacle that trips up business plaintiffs elsewhere by providing that a complainant need not prove competition between the parties.

Section 4165.03 sets remedies that cut in both directions. Under (A)(1) a person likely to be damaged may seek an injunction without proving monetary damage or lost profits, under (A)(2) a person actually injured may sue for actual damages, and under (B) the court may award fees to the prevailing party, against a plaintiff whose action it finds the plaintiff knew to be groundless or against a defendant that willfully engaged in a listed practice knowing it was deceptive. The honest limit is that chapter 4165’s list is built around representations about goods, services and origin, so it fits a broker’s marketing conduct far better than a dispute about what an advance ended up costing. In most Ohio files the live claims sit in breach of contract, fraud in the inducement and recharacterization, with a deceptive practices count added only where the sales pitch is documented.

7. What Section 2329.66 Leaves a Guarantor Standing On

Once your personal guaranty turns into a judgment against you individually, Ohio Rev. Code §2329.66 is the list of what a creditor cannot take. The residence exemption at §2329.66(A)(1)(b) protects an interest not exceeding one hundred twenty-five thousand dollars in one parcel or item of real or personal property used as a residence by you or a dependent. One motor vehicle is protected to three thousand two hundred twenty-five dollars under (A)(2). Cash on hand, money due and payable, money to become due within ninety days, tax refunds and money on deposit are protected only to four hundred dollars under (A)(3), which is the figure that surprises people most.

The working-asset exemptions are modest. Implements, professional books and tools of your trade or business are protected to two thousand twenty-five dollars in the aggregate under (A)(5), household goods run to five hundred twenty-five dollars per item and ten thousand seven hundred seventy-five dollars in aggregate under (A)(4)(a), and the wildcard at (A)(18) is one thousand seventy-five dollars and by its own terms applies only in bankruptcy, so it does nothing against a state court execution.

Your pay is protected by formula rather than by a flat number. Section 2329.66(A)(13) exempts the greater of seventy-five percent of disposable earnings or, for a weekly pay period, thirty times the current federal minimum hourly wage, with multiples of sixty, sixty-five and one hundred thirty for biweekly, semimonthly and monthly periods. Every dollar figure in the section is subject to §2329.66(B), which directs the Ohio judicial conference to adjust each amount for inflation on April 1 of every third year and publish it in the register of Ohio, so the operative number in a live case can exceed the printed one. Note also that the section is written around one person domiciled in this state and contains no entireties provision of the kind that shelters a married couple’s residence in Massachusetts or North Carolina, which is why two signatures on a guaranty change the arithmetic badly.

Who Should You Call? Our Top-Rated Business Debt Firms

One firm on this list works the entire lifecycle of a business debt file, from stopping the daily debits through attorney-led negotiation, UCC lien removal, and a signed release. The other two cover broader debt categories that often sit alongside the advances. Choose accordingly.