6 Mistakes Business Owners Make When Advance Service Group LLC Sues

When Advance Service Group sues, the most damaging mistakes are not taking any action or trying to deal with the lawsuit on your own. A pending lawsuit is serious business, and not taking any action will only make things worse. There are several major mistakes you can make to negatively impact your business. Here are 6 mistakes that you must avoid when your business is involved with Advance Service Group LLC or any other merchant cash advance company.

1. Tossing the papers aside

You may be tempted to throw your lawsuit papers away, but doing so is a mistake. The lawsuit papers in the case contain essential information about your case. The lawsuit papers tell you who filed the lawsuit and their contact information. The lawsuit papers can inform you what they are claiming you owe them and why. Throwing out the lawsuit papers may lead to important deadlines being missed and will only exacerbate the problems for you and your business. Whether or not it was you who was served, be sure you inform your attorney of how the documents were served and who they were served to. Collect any of your emails, contracts, written notes, and payment history. Make copies of the relevant documents, both electronic and paper, and send them to your attorney. You will need all these documents to defend against the lawsuit, along with the financial records of the business.

2. Assuming you have 30 days

Debt collection laws are complicated, and there are time limitations to respond to lawsuits. However, the duration of this depends on several factors that include the court’s rules and which court the lawsuit was filed in. If you were served, the amount of time you have to file a response may be less than 30 days, depending on how you were served. The law in NY gives 20 or 30 days for defendants to respond to lawsuits, depending on how they were served. If the deadline to respond passes, Advance Service Group can move for a default judgment, which the court could grant. A default judgment is a ruling by the court in favor of the plaintiff because you failed to appear or respond. Talking to Advance Service Group might be helpful in some situations, but that does not always stop the lawsuit or prevent a judgment against you. Talking with the opposing party will not give you more time to respond to the lawsuit.

3. Letting a negotiator replace counsel

Seeking help from a third-party negotiator instead of hiring an attorney is not a good idea. Having someone to negotiate the terms of a lawsuit does not necessarily solve your problems. Hiring a debt negotiator is not the same as hiring a defense attorney. They cannot represent you in court like an attorney. In New York, a corporation cannot represent itself in court in most cases. Negotiating with Advance Service Group may enable you to resolve the case by making a settlement. But do not abandon your legal counsel for a negotiator. Instead, a defense attorney could negotiate with Advance Service Group on your behalf. The attorney will help resolve the lawsuit, and the negotiator can help resolve the debt. These are two important but different things. An attorney matters even more if you are an owner, an officer, or a member of an LLC, because you probably have concerns about your personal exposure. Understanding the legal issues is difficult enough, and the possibility of being personally liable makes it more complicated.

4. Accepting their numbers unexamined

When Advance Service Group pursues the money in court, they will submit their calculation of the amount they claim you owe. Those numbers are not always accurate, and it’s up to your attorney to analyze the other side’s calculation. Accepting the amount they claim without verifying the figures may be a mistake. It is important that you verify the claims by examining the contract and the payments you have made.

In negotiating, you can ask for a reconciliation. This is a process in which you ask that the funder look at your business revenue since the contract was signed, then consider whether the amount of your payments needs to be adjusted. Since the contract was signed, has the business lost revenue? If so, how much? Did you ask the funder for a reconciliation (a recalculation of what you owe based on the lost revenue), and how did the funder respond?

The fact that Advance Service Group calls the debt an advance does not always make it true. What matters is the contract itself and the parties’ rights. In 2020, New York’s appellate court let a merchant’s usury defenses proceed in a case called LG Funding v. United Senior Properties of Olathe. It did it by applying one of the most fundamental principles of contract law: there is no loan without an unconditional promise to repay. A merchant’s usury defenses in New York courts hinge on this basic issue. Do not assume that just because Advance Service Group calls itself a cash advance company, you do not have defenses to this lawsuit.

5. Moving money after a freeze

If Advance Service Group puts a restraining order or restraint on your business account, it can prevent your business from using the frozen funds. Before moving money from a frozen account, be certain you have spoken with a defense attorney about your rights and duties. To determine the legitimacy of the claim, you must examine the actual document. What does it say? What does it allow? What does it prohibit?

A UCC financing statement, a notice of assignment, a court subpoena and a court restraint are different things. Not every demand for money is valid. You should examine each one with your attorney’s help. Advance Service Group v. Vision Home Builders was a 2024 New York decision about the funder’s motion to make a garnishee bank turn over money it held under New York’s state rules. A restraining notice on a bank can last for up to one year. Once the bank holds twice the amount due under the restraint, the rest of your money is not reached by the notice.

6. Giving up after a judgment

Once a judgment is entered, the merchant may think the case is lost permanently. That is not necessarily true. Get an attorney’s help to see what you can do, and how. Relief from a default is not automatic. In New York a motion to vacate a default based on excusable default must be made within one year after the judgment and written notice of entry are served on you. Get to court in time, and do not assume the judge will take your side.

Starting in 2019, a New York court can use a confession of judgment to enter judgment only in the county where the defendant lived when signing it, or lived when it was filed. A business resides wherever it has a place of business.

Settling is also possible. But never sign anything without thinking carefully. Ask: How much is the total? Who is released? Which of your guarantees are released? How does the lawsuit end? What happens if you miss a payment? Make sure you are not agreeing to something that you will not be able to follow through with.

A free contract review costs nothing and takes a day or two. Call (888) 837-7053, or send the agreements to Delancey Street for a straight read on your options.