What is an MCA lawsuit?

If you're a small business owner who has taken out a Merchant Cash Advance, you may be wondering what an MCA lawsuit is.

What is an MCA lawsuit?

If after a week or two, on average, the Merchant Cash advance company is unable to recover the borrower as a customer and make them pay again, the MCA lender will hand over the file to their internal legal department or an external law firm to file a breach of contract lawsuit.

Merchant cash advance

lawsuits are often filed with New York State. This is because laws in this state tend to be more favorable to MCA lenders. In addition, many MCA companies include a stipulation in their contracts that allows them to file lawsuits in New York.

This applies even if your company is not located there. When debt collection or negotiation doesn't work, it's time to file a merchant cash advance lawsuit. When merchants refuse to comply, they become debtors and are subject to legal enforcement of their claim. There are several ways to collect a cash advance from a merchant depending on your specific situation.

Because merchant cash advances are not considered loans, they are not governed by laws that apply to other business loans. Failure to make MCA payments could be considered a breach of contract. This means that the merchant's cash advance lender could file a lawsuit against your company and include the Confession of Judgment clause. Common creditors of merchant cash advances such as Kalamata Capital, Pearl Capital, Mantis Funding, Kash Capital, On Deck Capital, Ivy Receivables, Last Chance Funding, and Green Note Funding now have to go through the regular litigation process like any bank or other lender would.

This means that a small business can defend itself and keep the burden on MCA companies to prove its case. Unfortunately, we still see frequent default judgments handed down against small businesses by law firms such as Zachter PLLC, Berkovitch %26 Bouskila and The Feldman Law Firm PC on behalf of MCA lenders. However, small businesses can now proceed to vacate these lawsuits for default due to improper service or based on a reasonable excuse and reopen their case so that it can be litigated on the merits, just like in consumer debt cases, while annulling confession judgments in the past was a burden almost impossible to fulfill. Traditionally, the merchant cash advance (MCA) industry was born in New York, and its law remains the law of choice in many MCA agreements.

Many small businesses turn to merchant cash advances (MCA) to help their businesses overcome difficult times. However, merchant cash advances (MCA) can quickly become another major problem, leaving businesses in an even more dire situation. During your claim for merchant cash advances, you can prove that your MCA is actually a “loan” and not an advance.