Short answer: If you ignore an MCA lawsuit, the funder gets a default judgment in 20-30 days. Once they have that judgment, they can freeze your bank accounts, intercept payments from your credit card processor, go after your personal assets if you signed a personal guarantee, put a lien on your house, and add tens of thousands in attorney fees and default interest on top of what you already owed. None of this requires a trial. None of it requires the judge to hear your side. The clock starts the day you got served, and once it runs out, your leverage is gone.
If you’ve been served and you’re thinking about ignoring it, read this before you do anything else.
What counts as “ignoring” an MCA lawsuit?
You’re ignoring the lawsuit the moment you fail to file a response (called an Answer) within the deadline on your summons. In most states that’s 20-30 days from the date you were served. Not 30 days from when you read it. Not 30 days from when you got around to it. From the day a process server handed it to you, left it with someone at your office, or in some cases, taped it to your door.
A few things people get wrong:
- Throwing out the papers doesn’t reset the clock. You were served. The court knows.
- Calling the funder doesn’t stop the case. They’ll happily talk to you while their attorney files for default in the background.
- Saying “I never got it” rarely works. Process servers file affidavits of service, and judges believe them by default.
Now — the 9 things that actually happen.
1. A default judgment gets entered against you, fast
This is the foundational consequence, and everything else flows from it. Once your answer deadline passes, the plaintiff’s attorney files a motion for default judgment. In most jurisdictions this is a paperwork exercise, the judge signs it, and you now legally owe whatever the complaint demanded. The full accelerated balance, default fees, attorney fees, court costs. You don’t get to argue the math. You don’t get to argue the contract. You lose by not showing up.
2. Your bank accounts get frozen, often within a week
Once they have the judgment, the funder’s attorney files a restraining notice (in New York, this is CPLR 5222) and sends it to every bank where they think you have an account. Your bank receives it, and within hours, your account is locked. Not partially locked. Frozen. Operating capital, payroll, everything. Many business owners find out when their card gets declined buying coffee.
The really painful part — they don’t need to know which bank you use. They can serve every major bank in your state on a fishing expedition, and whichever one has your money will freeze it.
3. Your credit card processor gets served and your revenue gets intercepted
The funder already filed a UCC-1 against your receivables when you took the deal. With a judgment in hand, they send a levy or notice directly to your merchant processor (Stripe, Square, whoever runs your card processing) and instruct them to redirect your daily settlements to the funder instead of you. This is the single fastest way to choke a business to death, and it’s done routinely.
4. Your personal assets are exposed (if you signed a PG)
Almost every MCA agreement has a personal guarantee buried in it, and most business owners signed without realizing what it meant. Once there’s a judgment against you personally, the funder can come after your personal bank account, your personal brokerage account, your car (in some states), and yes — your house.
This is the part that wakes people up at 3am. The business debt isn’t just business debt anymore.
5. A lien gets placed on your real estate
Once the judgment is docketed in the county where you own property, it automatically becomes a lien on any real estate in your name. You can’t sell. You can’t refinance. You can’t pull equity out. The lien sits there accruing interest, and at closing — whenever you eventually try to transact — it gets paid off the top before you see a dime.
6. Wage garnishment kicks in (in states that allow it)
New York has strong wage garnishment protections. Most other states don’t. If you’re the personal guarantor and you draw a salary or W-2 income from another source, the funder can garnish a percentage of every paycheck until the judgment is satisfied. In some states that’s up to 25% of disposable income, automatically, every pay period.
7. Post-judgment discovery — and the contempt risk that comes with it
This is the consequence almost no one warns you about. After judgment, the funder’s attorney has the right to subpoena you for a deposition, demand bank statements, demand tax returns, demand a list of every asset you own. You have to show up. You have to produce documents. If you don’t, the judge can issue a contempt order, and in some jurisdictions, that means a bench warrant for your arrest.
People think this is theatrical. It’s not. It happens every week in commercial courts.
8. The balance compounds — attorney fees, default interest, court costs
Your original MCA had a fixed payback amount. The judgment doesn’t. Once the judgment is entered, it accrues post-judgment interest (usually 9% in New York, varies elsewhere), the funder’s attorney fees get tacked on (often 25-33% of the balance per the contract), plus court costs, plus the cost of every enforcement action. A $150,000 balance can become a $220,000 judgment in 18 months without anyone making a payment.
9. The judgment follows you across state lines
Think you can move and start over? You can’t. A judgment from New York can be domesticated in any other state through the Uniform Enforcement of Foreign Judgments Act. The funder files some paperwork, pays a small fee, and now they have an enforceable judgment in Florida, Texas, wherever you went. The lien, the garnishment, the bank levies — they all travel with you.
What you should actually do if you’ve been served
Don’t ignore it. That’s the entire point of this article. You don’t have to win the case to avoid most of the consequences above — you just have to respond, which buys you time, forces the funder to actually litigate, and creates leverage to settle.
Most MCA cases end in negotiated settlements, not trials. But the only people who get good settlements are the ones who answered the complaint. The ones who ignored it have a judgment against them, frozen accounts, and zero leverage to negotiate anything.
If you’ve been served and the deadline is approaching, talk to someone who handles MCA defense before the clock runs out. Once that judgment is entered, the conversation changes completely — and not in your favor.
