Merchant cash advance lawsuit defense
Sued by an MCA lender? You have options.
A lawsuit from a merchant cash advance funder is not the end of the matter. Business owners who contest the claim — rather than ignore it — change the trajectory of the case. Hartman Blake reviews MCA disputes and litigates on behalf of businesses facing collection actions.
Request a confidential case reviewWhat happens when an MCA lender sues
The lawsuit is the beginning, not the verdict.
Most MCA funders file in New York courts — often Nassau County or Kings County Supreme Court — regardless of where your business operates. They move quickly, seek confessions of judgment or default judgments, and rely on the fact that most defendants do not respond. Responding changes everything.
Legal defense strategies
How MCA claims are contested.
The legal arguments available in an MCA dispute depend on the specific agreement, the funder's conduct, and the jurisdiction. Common defense theories include:
Usury and true loan recharacterization
Courts in New York and other states have found that certain MCA agreements are, in substance, loans — not purchases of future receivables. When the effective interest rate exceeds the criminal usury threshold, the agreement may be void and unenforceable.
Procedural and jurisdictional defenses
Many MCA funders file in New York even when the business and the transaction have no meaningful connection to that state. Challenging personal jurisdiction, venue, or service of process can alter the posture of the case significantly.
Funder conduct and agreement terms
Aggressive collection tactics, unauthorized debits, or material misrepresentations in the funding process may give rise to counterclaims or affirmative defenses that change the leverage in the matter.
Contesting default and judgment enforcement
If a default judgment has already been entered, it may be possible to vacate it and reopen the case. Enforcement of a judgment — through bank levies or restraining notices — can also be challenged on procedural grounds.
What a contested MCA case looks like
Litigation takes time when it is genuinely contested.
MCA funders count on quick defaults. When a defendant answers and contests the claim, the case enters a different track entirely.
Filing
The funder files a summons and complaint, typically in a New York court. A confession of judgment or emergency motion may accompany the filing.
Answer and defenses
Counsel files an answer raising affirmative defenses and, where appropriate, counterclaims. This is the critical step that prevents a default judgment.
Discovery and motion practice
Both sides exchange documents and take depositions. Dispositive motions — including motions to dismiss or for summary judgment — may be filed and argued.
Resolution
Cases resolve through dismissal, negotiated resolution, or trial. Contested matters routinely take one to three years or more, depending on the court and the issues raised.
Why legal representation matters
Ignoring the lawsuit is the most costly option.
A business owner who does not respond to an MCA lawsuit will almost certainly face a default judgment. That judgment can be used to freeze bank accounts, restrain receivables, and pursue personal guarantors. Contesting the claim — even if the outcome is uncertain — preserves options that a default forecloses permanently.
Start with a confidential review of your matter.
Hartman Blake reviews MCA disputes and litigates on behalf of businesses facing collection actions. The review is confidential and does not create an attorney-client relationship.
Request a confidential case reviewNo attorney-client relationship is created by submitting an inquiry. Attorney review required before representation.