10 Steps to Take the Day You Get Sued by an MCA Company

Not tomorrow. Not when your accountant gets back to you. Right now.

You're looking for a few critical things. First, which court did they file in? Most MCA lenders file in New York, even if your business is in Texas or Florida — there's a confession of judgment clause (or a forum selection clause) buried in your MCA agreement that lets them do this. Second, what are they asking for? The full purchased amount? Attorney fees? A temporary restraining order? Third, is there a restraining order attached? This is the most time-sensitive detail in the entire document. If there is one, skip ahead to Step 3 immediately.

Before you do anything else, log into every bank account you have. Personal and business. If the MCA funder filed an Order to Show Cause with a temporary restraining order (TRO), your accounts may already be frozen. This can happen within hours of the filing, not days.

You're checking for two things: whether your balances are still accessible, and whether any pending transactions have been blocked. If your accounts are frozen, you need to know that now, not when your rent check bounces.

This is not an exaggeration. A TRO in an MCA case can freeze every dollar you have — business accounts, personal accounts, accounts that have nothing to do with the MCA at all. The funder's attorney files it ex parte (meaning without telling you first), and a judge signs it the same day.

You cannot wait on this. You need an attorney who can file an order to vacate or modify the restraining order, and you need them today. Not this week. Today. Every day that restraining order stays in place is a day your business can't pay rent, can't make payroll, can't operate at all.

This is the mistake almost every business owner makes. You're angry, you're scared, you want to negotiate — so you pick up the phone. Don't.

Anything you say to the funder or their attorney can and will be used against you in the lawsuit. You are not having a conversation. You are creating evidence. And MCA collection attorneys are very good at getting you to say things that sound reasonable in the moment but destroy your legal position later. Things like "I know I owe the money" or "I just need more time." Those are admissions. They will show up in court filings.

Not your cousin who does real estate closings. Not your corporate attorney who set up your LLC. An attorney who has actually defended MCA lawsuits, in the jurisdiction where you were sued.

This matters because MCA law is its own animal. The agreements are structured as purchases of future receivables (not loans), which means the legal framework is different from traditional debt. The defenses that apply — usury, unconscionability, fraud in the inducement, challenging the confession of judgment — require someone who knows this area specifically. A general business attorney will burn your money learning on the job.

You need the original MCA agreement, any amendments or renewals, the ACH authorization, the personal guarantee, the UCC filing receipt, and every email or text message between you and the funder or broker. All of it.

Your attorney needs to see exactly what you signed. Many MCA agreements contain provisions that are unenforceable — but you won't know that unless someone who reads these for a living actually reviews yours. Brokers also make verbal promises ("you can refinance in 60 days," "this won't affect your credit") that directly contradict the written terms. Those discrepancies matter in litigation.

When you get sued, you have a limited window to file a formal response (called an "Answer"). In New York State Supreme Court — where most MCA lawsuits are filed — you typically have 20 to 30 days to respond, depending on how you were served. If you were served by personal delivery, it's 20 days. If by mail, 30.

Miss that deadline and the funder gets a default judgment. That means they win automatically. No hearing, no chance to argue, nothing. The judgment goes on your record, and they can use it to garnish accounts, seize assets, and pursue the personal guarantor for the full amount. Do not let this deadline pass.

MCA funders don't always play clean. And the things they've done to you before and after filing the lawsuit may actually help your defense.

Start writing down everything. Did they call you 15 times a day? Did they threaten to call your customers? Did they actually call your customers? Did they threaten criminal prosecution (which they have no authority to do)? Did they tell you "we'll make sure you never get funding again"? Did they stack additional fees onto your balance that aren't in the original agreement?

All of this is potentially relevant. Some of it may constitute harassment, fraud, or breach of the implied covenant of good faith. Your attorney needs a timeline with dates, names, and what was said.

This is the second most common mistake. You're panicking, your accounts might get frozen, so you start moving money around — transferring balances to your spouse's account, paying yourself a large salary, shifting receivables to a different entity.

The funder's attorney is looking for exactly this. It's called a fraudulent conveyance, and it can turn a civil lawsuit into something much worse. It also gives the court a reason to keep that restraining order in place, or to expand it. Judges do not like it when defendants start shuffling assets after getting sued. It makes you look guilty even if you're not.

Leave the money where it is. Let your attorney advise you on what you can and can't do.

Here's the part most business owners don't realize: the lawsuit is not the endgame. It's the opening move.

MCA funders sue because it gives them leverage. The restraining order freezes you out. The legal fees scare you. The default judgment threat pressures you into settling on their terms, fast, without pushing back. That's the playbook.

But the playbook only works if you don't respond. If you do respond — with the right attorney, with the right defenses, with the right counter-pressure — the math changes. Funders don't want to litigate for 18 months. They want to collect and move on. That gives you room to negotiate a settlement that's actually survivable, sometimes at 30 to 50 cents on the dollar, sometimes with a payment plan that lets your business keep operating.

The worst thing you can do is nothing. The second worst thing you can do is something impulsive. The right move is Step 1 through Step 9, in order, starting today.