Memphis MCA debt relief lawyers and companies2026 rankings, written for owners already being sued

When the funder stops negotiating: judgments, garnishment and defense in Memphis

In a hurry? Skip to the rankings ↓

Most guides assume you are still deciding. This one assumes something already happened. A process server came to the shop, or a bank in Memphis called to say the operating account is restrained, or a judgment you never saw entered turned up on a Shelby County docket with a New York caption on it.

That last scenario is the common one, and it confuses people because Tennessee bans the mechanism that produced it. The confession of judgment you signed at funding is void here. The judgment a funder obtained on it somewhere else can still walk into a county clerk's office and start behaving like a Tennessee judgment. Different problem, different statute, different clock.

How a New York judgment ends up in Shelby County

Start with what Tennessee actually says. Tenn. Code Ann. § 25-2-101(a) declares void any power of attorney or authority to confess judgment given before an action is instituted and before service of process, and declares void any judgment based on it. Subsection (b) preserves such an authority only if it was given after suit and after service. There is no exception in the text for businesses, guarantors, or sophisticated parties.

So the funder does not use it here. It uses it in a state that permits one, gets a judgment, and then domesticates it under the Uniform Enforcement of Foreign Judgments Act. Section 26-6-104 lets an authenticated foreign judgment be filed with any circuit or chancery court clerk, whereupon it is treated as a judgment of a Tennessee court of record and is subject to the same procedures, defenses and proceedings for reopening, vacating or staying as one.

Read that last clause twice. The statute that lets the judgment in is the same statute that lets you attack it. It arrives carrying Tennessee's own vacatur procedure, and the argument that the underlying confession was void is exactly the kind of defense that provision contemplates.

The 30 days between service and a levy

Section 26-6-105 sets the sequence. The judgment creditor files an affidavit stating your last known address. The clerk issues a summons. The summons is served on you as judgment debtor. Then subsection (c): no execution or other process for enforcement of a foreign judgment filed under the act shall issue until 30 days after the date a summons has been served on the judgment debtor.

Thirty days. That is the gap before a levy or a garnishment can move against a Memphis operating account. It is not a grace period and it does not renew. It is the window in which a motion gets researched, drafted and filed.

Most owners spend it on the phone getting quotes. The date of service is the date that matters, so write it on the summons the moment you take it, and check the affidavit address while you are at it. A creditor that served a stale address has handed you an argument about notice before anyone reaches the merits.

When the funder simply files suit instead

The other path is ordinary. The funder sues your company and you personally on the guaranty, in Shelby County or in the county named by the contract's forum clause, and the complaint attaches the agreement.

Answer deadlines are short and missing one produces a default judgment that is far harder to unwind than a case you defended. Before the deadline, the file gets read for defenses that actually exist in Tennessee: breach of the reconciliation covenant, failure of the funder to perform a condition its own contract created, an accounting that does not match the demand, and a counterclaim under § 47-18-109 where collection conduct crossed into unfair or deceptive practice, which carries treble actual damages for a willful violation under subsection (a)(3).

What is not a defense is the interest rate. Section 47-14-102(8), amended by Public Chapter 565 in 2006, takes the discount or fee in an account purchase transaction out of the definition of interest entirely. The usable version of that argument is structural: show the funder never carried the risk that receivables would fail, and the transaction becomes a loan, at which point § 47-14-117(c) puts refunds and attorneys' fees on the table.

What a lien and a levy do to a Memphis freight operation

Memphis businesses carry a specific exposure here. A carrier or 3PL along Airways Boulevard or out by the airport holds most of its value in receivables owed by shippers and brokers, and that is precisely what the funder's financing statement covers.

Those filings sit with the Tennessee Secretary of State under § 47-9-501(a)(2). A factoring company runs that index before it advances against an invoice, so a live MCA filing does not just threaten a levy, it closes the funding line you would use to survive one. Owners discover this at the worst possible moment: when the freight is booked, the driver is loaded, and nobody will buy the invoice.

Two record checks are worth doing today. Whether each financing statement is within the five-year effectiveness period in § 47-9-515 or has lapsed without a continuation. And whether the filing describes collateral it is actually entitled to, because a blanket description bolted onto a single-advance purchase is the kind of overreach that gets negotiated down when it is raised early rather than after payoff.

Why the smallest funder sues first

With four advances stacked, the funder that sues is usually not the largest. It is the last one in, the one holding a $20,000 balance and a position behind three other filings, and it sues because litigation is the only leverage it has left.

That changes the order of operations. A suit from a junior funder is an opportunity as often as a crisis, because that funder's realistic recovery is low and its appetite for a discounted resolution is high. The senior funders are watching, and a cheap settlement with the loudest party teaches the rest exactly what noise is worth.

Sequence the file deliberately. Which funder has filed, which has only threatened, which has gone quiet, and what each one's filing date and position actually are. That map decides who gets paid first and at what price.

What not to do in the first week after service

Do not ignore it. A default judgment in Tennessee is a much worse starting position than a defended case, and it converts a negotiation into an enforcement problem.

Do not close the account the debits hit and do not move deposits to a new bank without advice. Nearly every advance agreement calls that an event of default, and a funder that can point to a deliberate diversion of receipts has just improved its case in front of a judge.

Do not take another advance to cover the payments. A fifth funder does not fix four. And do not admit a balance in writing or over a recorded collection line before someone has checked the funder's math against the contract, because the balance in the demand letter is frequently not the balance the agreement produces. Collect the summons, the complaint, every agreement and guaranty, ninety days of statements, and the UCC search, then get them read within 48 hours.