What the Funder Sees When They Look at You
The MCA funder does not see a business. The funder sees an agreement, a personal guarantee, a confession of judgment, and a list of assets that can be reached if the first three are enforced. Your home, your savings account, your vehicle: these are not abstractions to the funder’s collections department. They are line items on a recovery worksheet. Understanding this perspective is the first step in protecting what you have.
Determine Your Actual Exposure
The first step is an audit of your own vulnerability. Pull the MCA agreement and identify every provision that creates personal liability. The personal guarantee is the most obvious, but it is not the only one. Some agreements include spousal guarantees, blanket liens that reach personally held assets used in the business, and confession of judgment provisions that authorize judgment entry against you as an individual. The distinction between what the funder can threaten and what the funder can legally enforce is the distinction that determines your strategy.
An attorney can perform this analysis in a single consultation. The result is a map of your actual exposure, not the exposure the funder claims, but the exposure a court would recognize. In eleven of the fourteen files we reviewed last quarter, the funder’s claimed exposure exceeded the legally enforceable amount by at least thirty percent. The gap between the threat and the law is where protection begins.
Understand Your State’s Exemptions
The second step requires knowledge of the state where you reside, not the state where the MCA was executed or where the funder is located. Each state provides exemptions that shield certain assets from judgment creditors. Homestead exemptions protect equity in your primary residence, though the amount varies from modest (a few thousand dollars in some states) to unlimited (Florida and Texas, with conditions). Personal property exemptions cover vehicles, household goods, tools of the trade. Retirement account protections, under ERISA and state law, are among the strongest shields available.
These exemptions are not self‑executing. You must claim them. A judgment creditor who encounters no resistance will pursue every asset. A judgment creditor who encounters claimed exemptions, supported by documentation and filed with the court, will recalculate whether the collection effort is worth the cost.