5 Steps to Take the Day Your MCA Company Files a Confession of Judgment

Your checklist is solid — you're already ahead of 90% of the business owners I see in this situation. A few additions:

6. Contact your credit card processor (Toast, Square, Clover, whoever you use) and ask them to update your deposit account to the new one. MCA companies often have a separate ACH authorization with the processor that bypasses your bank account entirely. If they have a direct debit agreement with your processor, the processor might continue sending them money even after you switch banks. 7. Check whether you personally guaranteed the MCA. If you did, they can go after your personal assets too, not just the business account. You'll need to protect personal accounts as well. 8. Document the economic impact of the COJ on your business and employees. If you need to file an emergency motion, judges respond strongly to evidence that 22 jobs are at risk. Get a payroll summary showing your upcoming obligations. 9. Do NOT make any partial payments to the MCA company trying to "show good faith." This can be used to argue you acknowledged the debt amount and weaken your defense.

You're handling this the right way. Three generations of a family restaurant is exactly the kind of thing judges take seriously when considering whether to vacate a COJ.

Former restaurant manager here, not in your situation anymore but I was two years ago with a $90k COJ on a pizzeria in Bay Ridge. Your list is really good. The one thing that saved me that I don't see on your list: call your landlord.

Seriously. If the MCA company goes after your business aggressively, they might try to intercept lease-related payments or even contact your landlord to create pressure. I got ahead of it by calling my landlord, explaining the situation honestly, and asking him to reject any third-party inquiries about my lease. He was an old-school Brooklyn guy and told them to pound sand when they called.

Also, if you have any automatic payments coming out of the old account (insurance, utilities, payroll service), make sure you update ALL of them to the new account. I forgot my liability insurance auto-pay and it lapsed for two weeks before I caught it. That could have been catastrophic if someone slipped and fell during that gap.

You've got this. The fact that you're organized and moving fast on day one puts you in a much better position than most.

This is exactly the kind of post this forum needs. I'm an attorney who handles these cases and everything you described is textbook correct execution. I want to highlight a few things for others reading this:

The three grounds your attorney used are the holy trinity of MCA defense right now:

1. Usury — when the effective APR exceeds New York's civil usury cap of 16% or criminal usury cap of 25%, and many MCAs translate to 100-400% APR, the transaction can be voided entirely. 2. Inflated balance — MCA companies routinely file COJs for the full payback amount without crediting payments already made. Judges do not look kindly on this. 3. Loan recharacterization — if the MCA company takes fixed daily debits regardless of your actual revenue, it's functionally a loan, not a purchase of future receivables. This subjects them to banking regulations they're trying to avoid.

The other thing you did right that I want to emphasize: you stopped talking to the MCA company directly. Every phone call with them is a fishing expedition for information they can use against you. Once you have an attorney, all communication goes through them. Period.

Congratulations on your outcome. You earned it.

I'm literally crying reading this because I'm in day two of my COJ nightmare right now. I own a flower shop in Park Slope and they filed for $38,000 yesterday. I've been on this forum since midnight.

Thank you for writing this out. I just printed your five steps and I'm taping them to my kitchen wall. I called the SBS hotline this morning and I have a lawyer consultation at 2 PM today. I opened a new account at a credit union at 9 AM when they opened. I've got my bank statements in a folder and I'm reading through the MCA agreement right now.

I don't know if my story will end as well as yours but just knowing that someone who was exactly where I am six months ago came out the other side — I can't tell you how much that means right now. My hands are still shaking but at least I have a plan.

I'll come back and update this forum when I know more. Thank you.

This is actually a very strong defense and you should act on it immediately. If your LLC operating agreement requires both managing members to authorize debt above $10,000, your partner lacked the authority to bind the LLC to this MCA or to sign the confession of judgment.

Your immediate steps:

1. Get a certified copy of your LLC operating agreement from your files. The provision requiring dual authorization is your primary weapon. 2. Open a new business account at a different bank TODAY and redirect all incoming receivables to it. Contact your clients and have them update payment information. 3. Retain an attorney to file an emergency motion to vacate the COJ on the grounds that the confession was signed without proper authorization under the operating agreement. Courts take unauthorized agent actions seriously. 4. Separately, you should consult with an attorney about claims against your business partner personally. If he took LLC funds for personal use, that's a breach of fiduciary duty and potentially conversion.

I've seen cases like this resolved favorably for the non-signing partner. The MCA company's recourse is against your partner personally, not the LLC — but you need to get in front of a judge quickly before the account is frozen.

Not a lawyer, but I went through something eerily similar. My business partner took a $60k MCA without telling me and blew it on gambling. The COJ hit and our construction company's account got frozen with two active job deposits pending.

What saved us: our operating agreement also had a dual-signature requirement for debt. My attorney filed an order to show cause and the judge vacated the COJ within two weeks. The MCA company then went after my partner personally instead of the business.

Two things I wish I'd done faster: First, I should have redirected our incoming payments the same day I found out, not three days later after two client payments hit the frozen account. Second, I should have changed the online banking passwords immediately — my partner still had access and tried to move money around after I confronted him.

Protect the business first, deal with the partner situation second. I know the betrayal burns but the clock is ticking on that bank freeze.

First, take a deep breath. I'm a commercial litigation attorney in Manhattan and I deal with these cases constantly. Here's what you need to do immediately, today, not tomorrow:

1. Do NOT call the MCA company again or agree to anything on the phone. Anything you say can be used to undermine your position later. 2. Open a new bank account at a completely different bank — not a different branch, a different institution entirely. Move any funds you can access right now. Once they get a restraining notice on your existing account, every dollar in there is frozen. 3. Gather every document related to the MCA: the agreement you signed, daily debit records, any emails or texts with the funder. 4. Contact an attorney who specifically handles MCA defense, not your cousin's divorce lawyer, someone who knows UCC Article 9 and CPLR 3218. Many of us offer free initial consultations for COJ cases.

The confession of judgment is a legal mechanism where you essentially pre-authorized a judgment against you when you signed the MCA agreement. New York banned them for out-of-state borrowers in 2019, but if your business is in Brooklyn they can still file. However, there are several grounds to vacate a COJ — fraud, unconscionability, or if the MCA is actually a loan in disguise. Don't panic yet.

Same thing happened to me last year. I own a laundromat in East New York and took $40k from one of those MCA companies. One morning I went to pay my soap supplier and my entire business checking account was frozen — $11,300 just gone. No warning, no phone call, nothing.

I'm not going to sugarcoat it, the next two weeks were the worst of my life. But I found an attorney through the NYC Small Business Services hotline and she got the COJ vacated within 30 days because the MCA company had misrepresented the terms and the daily debits they were taking were way more than what the contract said. We ended up settling for about 40 cents on the dollar.

The biggest thing I wish someone had told me on day one: MOVE YOUR MONEY IMMEDIATELY. Like within the hour. Don't wait. Don't think about it. Just open a new account at a bank the MCA company has no connection to and move what you can. Everything else you can figure out after your funds are safe.

I am furious reading this. NOTHING that person told you is true, and what they did may actually be illegal.

Let me be very clear: A confession of judgment is NOT a final, unappealable judgment. It CAN be vacated (thrown out) by a judge for a number of reasons, including:

- Fraud or misrepresentation by the MCA company
- Unconscionable terms in the agreement
- Errors in the amount claimed
- The MCA being a loan in disguise (which would make it subject to usury laws)
- Improper service or filing

What that collector did — calling you, pressuring you, telling you there's no point in fighting, demanding a wire transfer — is textbook predatory behavior and may violate the Fair Debt Collection Practices Act as well as New York's consumer protection laws.

Here is what you do RIGHT NOW: Do not call them back. Do not send any money. Open a new bank account at a different bank and move your funds. Then call the Legal Aid Society at 212-577-3300 or the NYC Small Business Services helpline at 888-SBS-4NYC. They can connect you with free or low-cost legal representation for exactly this kind of situation.

You've been running your business for 31 years. Don't let some bully on the phone convince you it's over. It's not.

Please listen to the attorney above. I'm a 58-year-old woman who owns a tailoring shop in Sunset Park and I got the EXACT same call two years ago. Same script, same threats, same "there's nothing you can do" garbage. I was so scared I almost wired them $15,000 from my personal savings.

My daughter talked me out of it and helped me find a lawyer through the SBS helpline. Turns out the MCA company had inflated the balance by almost $6,000 in bogus fees. My lawyer filed a motion to vacate, and when the judge saw the numbers, she threw out the COJ completely. We settled the real remaining balance for $3,800.

These people are counting on you being too scared or too confused to fight. That's their entire business model. You've survived 31 years in Brooklyn — you're tougher than they think. Get help today. The consultations are usually free.

You actually have strong grounds to fight this. New York amended CPLR 3218 in 2019 specifically to prohibit confessions of judgment against out-of-state borrowers. If your business is a New Jersey LLC or corp and you don't have a physical office in New York, that COJ filing is almost certainly invalid and your attorney can move to vacate it relatively quickly.

Here are your immediate steps:

1. Call a lawyer TODAY — many MCA defense attorneys work on contingency or deferred payment for exactly this situation since they know your money is frozen. Look for someone admitted in both NY and NJ. 2. File an Order to Show Cause to vacate the COJ and unfreeze your account. Given the out-of-state issue, some judges will grant emergency relief within days. 3. For payroll this Friday — I know this is brutal — but talk to your employees honestly. If you have a personal account with any funds, you may be able to bridge the gap for a few days. Some attorneys can also get an emergency partial release of frozen funds for documented payroll obligations.

Do NOT ignore this or hope it goes away. Every day you wait makes it harder to recover those frozen funds.

Brother, I've been exactly where you are. Landscaping company, eight employees, account frozen with $19k in it the week before Christmas 2024. I remember sitting in my truck crying because I didn't know how I was going to tell my guys.

The attorney above is right about the out-of-state thing. My lawyer got the freeze lifted in nine days because my company is registered in Connecticut and the COJ was filed in New York. The MCA company's lawyer didn't even show up to oppose the motion. These guys file hundreds of COJs hoping people just roll over and pay.

One practical thing nobody tells you: go to your bank branch IN PERSON and explain the situation to a manager. They can't unfreeze the account without a court order, but some banks will flag the account so the MCA company can't debit additional funds while it's frozen. Also, document everything — screenshot your account balance, save the freeze notification, keep a log of every call. You'll need all of it.

The personal guarantee is a serious concern but it doesn't mean they can take your house tomorrow. Let me walk you through the realistic exposure and your immediate steps.

With a personal guarantee, the MCA company can potentially seek to enforce the judgment against your personal assets in addition to the business. However, there are important protections:

1. New York's homestead exemption protects up to $179,975 in home equity (in Kings County) from most creditors. With $400k in equity, some of it is exposed but not all. 2. A COJ against the business doesn't automatically become enforceable against you personally — they typically need to take additional legal steps. 3. Retirement accounts (401k, IRA) are generally exempt from creditor claims in New York. 4. Your daughter's 529 college savings plan has protections as well.

Your immediate steps: Open new personal AND business accounts at a bank neither of you has ever used. Move personal funds today. Do not wait. Get an attorney consultation immediately — Park Slope has several excellent MCA defense firms nearby. Bring the MCA agreement and the personal guarantee for review. There may be grounds to vacate the COJ that would eliminate the personal guarantee issue entirely.

Do not transfer your house into someone else's name or try to hide assets — that's fraudulent conveyance and will make everything worse.

We went through this. My husband and I own a pet grooming business in Carroll Gardens and we both personally guaranteed a $50k MCA. When the COJ hit, we panicked because we'd just bought our condo.

What actually happened: our attorney moved to vacate the COJ on the grounds that the effective interest rate was over 180% APR, making it a criminally usurious loan under New York law. The judge agreed, vacated the COJ, and the MCA company ended up settling with us for the original $50k minus what we'd already paid — so about $12k paid over 12 months. The personal guarantee evaporated with the COJ.

The key insight our lawyer gave us: if the MCA is recharacterized as a loan (which happens more and more these days), the personal guarantee may be void because it was given in connection with an illegal lending arrangement. Your factor rate of 1.49 translates to an absurdly high APR depending on the repayment period. That's ammunition.

Protect your money first, lawyer second, everything else after.

What you're describing is unfortunately very common in the MCA industry and it's one of the strongest grounds for vacating a confession of judgment. If you've made $33,500 in payments and they filed a COJ for the full $41,400, there's a clear discrepancy that a judge will want to examine.

Several things working in your favor here:

1. Most MCA agreements do NOT contain a valid acceleration clause that reverts the balance to the full purchased amount upon default. If yours doesn't have one, the COJ amount is fraudulent on its face. 2. Even if there is an acceleration clause, New York courts have increasingly found these clauses unconscionable, especially in agreements with small business owners. 3. The fact that your payments were retroactively reclassified as "fees" is a huge red flag. Pull your bank statements showing every daily debit and match them against the MCA agreement's payment schedule.

Your steps today: Secure your bank funds by opening a new account at a different bank. Collect all your bank statements showing the daily debits. Find the original MCA agreement and read every line about default and acceleration. Then get a consultation with an MCA defense attorney — this is a very winnable case.

I had almost the exact same situation with my food truck business. Took a $25k advance, paid back about $20k over eight months, then they filed a COJ for the full $35,500 (which was the total payback amount). I nearly had a panic attack.

My lawyer filed a motion to vacate and included all my bank statements as exhibits showing every single daily debit. The judge was visibly annoyed with the MCA company's attorney and vacated the COJ from the bench. We then settled the actual remaining balance — about $8,000 — for $4,500 paid over six months.

Keep every bank statement. Screenshot your online banking if you have to. That's your proof. These MCA companies bet on people not having documentation and just giving up. Don't be one of those people.

Stacked MCAs with dual COJs are complicated but they're more common than you'd think and there are established strategies for dealing with them. Don't spiral — here's your roadmap.

Immediate priorities in the next 24 hours:

1. New bank account — personal AND business — at an institution neither MCA company has ever seen. Move accessible funds NOW. Your pregnant wife's needs and your basic living expenses come first. 2. Find an attorney experienced with stacked MCA cases specifically. This is not twice the legal work — many of the same defenses apply to both COJs and they can be addressed in related motions. Some firms handle both for a single retainer. 3. Pull both MCA agreements and compare them. Often when MCAs are stacked, the second company knew about the first — and if the second advance was used to pay down the first, that's a pattern courts frown on. It can support arguments about unconscionability and predatory lending.

The good news: having two simultaneous COJs can actually help your case. It demonstrates a pattern of predatory stacking that judges find troubling. I've had cases where the second MCA was voided entirely because the company knew the borrower was already overextended and the daily debits from both advances were mathematically impossible to sustain.

Regarding your apartment closing — talk to your attorney about this immediately. A judgment lien could complicate your mortgage approval.

Auto body shop owner in the Bronx here — I had three stacked MCAs totaling $180k. Three COJs filed within a week of each other. I thought my life was over.

Eighteen months later I'm still in business and I settled all three for a combined $58,000 paid over two years. Here's what I learned:

The MCA companies will fight each other over your frozen funds. Seriously. When there are multiple restraining notices on one account, they have to figure out priority among themselves, and that chaos actually slows everything down and gives your attorney more time to work.

Also, the stacking itself is your best defense. My attorney proved that the second and third MCA companies had access to my bank statements showing the daily debits from the earlier advances. They knew I couldn't sustain the payments and funded me anyway. One judge called it "setting the borrower up to fail" and vacated that COJ entirely.

You're going to get through this. Take it one day at a time. Protect your money, get a lawyer, and don't let the stress affect your wife's pregnancy. I made that mistake and my blood pressure was through the roof for months.

You're not too late. In fact, you may be in a better position than most people because you found out BEFORE your account was frozen. That's actually an advantage.

There is no strict deadline for moving to vacate a confession of judgment in New York, though courts do consider timeliness — the sooner you act, the better. Three weeks is nothing. I've successfully vacated COJs that were months old.

Here's why your account may not be frozen yet: the MCA company filed the COJ but hasn't yet sent a restraining notice to your bank. This is a separate step they need to take. Some companies are slow about it, some wait strategically, and some are just disorganized. Either way, this is your window.

Your immediate action plan:

1. YES, move your money RIGHT NOW. Do not wait for the freeze. Open a new account at a different bank and transfer your operating funds today. Redirect your incoming payments and credit card processing deposits. 2. The fact that you were never served is actually a potential defense. While COJs don't require traditional service, there may be notice requirements in your agreement that weren't followed. 3. Get an attorney and file a motion to vacate proactively, before they freeze your account. Going to a judge first shows good faith and puts the MCA company on the defensive instead of you.

Every hour you wait is a risk. That restraining notice could hit your bank's compliance department at any moment.

You got lucky finding it before the freeze. I wasn't so lucky. I own a catering company in Jackson Heights and my COJ sat in the court system for SIX WEEKS before I found out — and I only found out when my account was frozen with a $32,000 payroll deposit sitting in it.

Do not waste this head start. I spent those six weeks blissfully ignorant while the MCA company was preparing all their enforcement paperwork. By the time I engaged a lawyer, they'd already filed liens against my catering equipment too.

Move your money TODAY. Not tomorrow, not after lunch, today. Open accounts at a bank and credit union you've never used before. Set up new payroll. Change your merchant processing deposits. Get your incoming receivables flowing to the new account.

Then find a lawyer and be grateful you have the luxury of doing this on your timeline instead of in a panic with frozen funds. I would have given anything for three weeks of advance notice.

I'll be honest with you as someone who's been practicing in this space for eight years: $7,500 is within the normal range for MCA defense with a COJ vacatur motion. I've seen retainers from $5,000 to $15,000 depending on the complexity and the firm. For a $42k COJ, $7,500 is reasonable if the attorney is experienced.

That said, here are your options in order of cost:

1. NYC Small Business Services — they have partnerships with pro bono legal organizations that handle MCA cases. Wait times can be longer but the cost is zero. Call 888-SBS-4NYC. 2. Legal Aid Society and Volunteer Lawyers for the Arts (since you're a designer) may be able to help or refer you. 3. Some MCA defense firms offer payment plans on their retainer — it doesn't hurt to ask. If the attorney knows your account is frozen, he may agree to $3,000 up front and the rest over 60 days. 4. Filing pro se (on your own) is technically possible but I'd strongly caution against it. The motion to vacate requires specific procedural steps and supporting affidavits, and one mistake can waive your rights.

The math: if the attorney gets the COJ vacated and negotiates a settlement at 40-50 cents on the dollar, you'd pay roughly $7,500 legal fees plus ~$17-21k settlement versus $42,000 if you don't fight. The retainer usually pays for itself.

I'm the Flatbush baker from the top thread — just wanted to follow up since I was in a similar financial position. My attorney asked for $6,000 and I literally didn't have it because my account was frozen.

What I did: I asked for a payment plan ($2,000 up front, $1,000/month for four months) and he agreed. Then I asked my sister for a loan for the initial $2,000. It felt humbling but she was glad to help when she understood the alternative was losing the bakery.

My total legal costs ended up being about $8,500 including the retainer, the motion filing fees, and the settlement negotiation. The COJ was vacated and I settled the remaining balance for $22,000 paid over 18 months instead of the $87,000 they wanted. So I paid about $30,500 total instead of $87,000.

Don't try to do this yourself. I'm a smart person too and I looked at those court filings and it's a completely different language. The $7,500 sounds like a lot when you're broke but it's an investment in keeping your business alive.

As a general principle, I can't tell you whether to settle because I don't know all the specifics of your case. But I can give you the framework to think about it.

The real question isn't "is 70% a good deal" — it's "what's the expected value of fighting versus settling." Consider:

- If you fight and WIN the vacatur, you may owe nothing further or be able to settle the actual remaining balance (after crediting your $30k in payments) at an even deeper discount. The remaining principal might only be $20k, and post-vacatur settlements often come in at 30-50 cents on that number, so you might pay $6,000-$10,000 plus the legal fees.
- If you fight and LOSE, you're back to the $61,000 judgment plus you've spent $10-13k in legal fees.
- The 70% offer ($42,700) is a middle ground that provides certainty but is honestly high for a settlement where the COJ has already been challenged.

My instinct based on what you've described: your attorney is right that you can probably do better. A factor rate of 1.45 with daily debits is very likely to be recharacterized as a usurious loan. And the fact that they're already offering 70% before you've even filed the vacatur motion tells me they know their position is weak. Companies with strong cases don't settle before the motion is filed.

At minimum, counter at 35-40 cents and see where they land. Don't accept the first offer.

I settled my $68k COJ at 45 cents on the dollar after my attorney filed the vacatur motion. The MCA company's first offer was 75 cents. We countered at 30 cents. They came back at 60. We held firm at 40. They eventually agreed to 45 cents ($30,600) paid over six months.

The total cost for me was $30,600 settlement plus $9,000 in legal fees = $39,600. The original COJ was for $68,000 and I'd already paid back about $25,000. So I paid about $65,000 total on a $45,000 advance, which still stings, but it's a lot better than $93,000 ($68k COJ plus the $25k I'd already paid).

My two cents: 70 cents is their opening bid, not their final number. The fact that they're offering it means they want to avoid the courtroom. Push back. Your lawyer knows the leverage points. And don't borrow $42,700 from your father-in-law when you might be able to settle for $25,000 in a few weeks.

Also, try to get a payment plan in the settlement instead of a lump sum. Spreading it over 6-12 months is much more manageable and most MCA companies will agree to it when the alternative is a fight they might lose.