Legal issues surrounding merchant cash advances: lawsuits, confession of judgment, personal guarantees, default consequences, and your rights as a borrower.
Quick Answer How do I protect my personal assets from an MCA lawsuit? If you signed a personal guarantee, your personal assets are at risk. Strategies: challenge the guarantee’s enforceability,…
Quick Answer Are merchant cash advances regulated by federal or state law? Minimally. MCAs are classified as commercial transactions, not loans, so they escape banking regulations, usury caps, and Truth…
Quick Answer What happens when you default on an MCA? Default triggers: UCC lien enforcement, confession of judgment filing, lawsuit, personal guarantee collection, increased withdrawal attempts, and potential contact with…
Quick Answer How do I fight an MCA lawsuit? File an answer within the deadline (usually 20–30 days). Key defenses: recharacterization as a usurious loan, reconciliation clause violations, unconscionability, fraud…
Quick Answer Can MCA funders contact my customers or family? It depends. MCAs are commercial transactions, so the FDCPA does not apply. However, state laws may prohibit harassment, and contacting…
Quick Answer Can an MCA company freeze my bank account? Yes — if your contract includes a confession of judgment clause, the funder can obtain a judgment and direct the…
Quick Answer Should I go to arbitration or court for an MCA dispute? It depends on your contract. Many MCA agreements include mandatory arbitration clauses that prevent you from going…
Quick Answer What do I do about an MCA lawsuit in New York? Respond immediately. New York is the #1 jurisdiction for MCA litigation. You typically have 20–30 days to…
Quick Answer What should I do about MCA legal problems? Do not ignore legal notices. If you have received a demand letter, confession of judgment, or lawsuit, you have a…
Quick Answer Can bankruptcy eliminate MCA debt? Yes, but it depends on the type. Chapter 7 liquidates assets to pay debts. Chapter 11 allows restructuring — including MCA obligations —…