6 Mistakes Business Owners Make When Capital Advance Services Sues

Got a lawsuit notice from Capital Advance Services over a Merchant Cash Advance (MCA)? You are probably looking at a case over one of the MCAs that Capital Advance Services provided as a Yellowstone Capital company. That puts your case on the list of MCAs in the New York Attorney General’s settlement with them, which canceled outstanding balances for both business and guarantors. Even so, the people who own these businesses still make costly mistakes.

1. Assuming you still owe

Just because a lawsuit notice comes doesn’t mean that you should just assume that you owe. Capital Advance Services is one of those companies that signed an agreement with the Attorney General for New York to cancel these outstanding balances. The companies may not collect or sell off that debt to someone who would try to collect.

2. Assuming every judgment disappeared

The agreement between Capital Advance Services and the New York Attorney General doesn’t automatically dismiss every judgment that comes out of these cases. The pending lawsuits went out the window. Only the outstanding judgments that Yellowstone listed with the courts, or those the merchants claimed by January 9, 2026, got wiped out. Satisfied judgments stayed satisfied. You had until January 9, 2026, to bring up judgments that didn’t show up on the list, or make a claim for payments. The checks went out April 3, 2026.

3. Paying whoever still calls

If somebody keeps asking for money out of an account covered under the Yellowstone settlement, do not pay it. You can file a complaint about this caller on the AG website. A different company, Delta Bridge Funding (which operates under the name of Cloudfund), took over Yellowstone’s business in May 2021. It is not covered by the settlement, and the Attorney General’s case against it was still pending as of spring 2026.

4. Ignoring the summons

If you get a summons in New York, and you ignore it, you are opening the door for a default judgment. Under New York law, you generally have 20 days after you are served to appear in a civil action. You may get another 10 days if a complaint is served a certain way. You have to answer in time to avoid losing by default. Deadlines still matter, even while discussing settlement. Getting papers from a company that wasn’t covered under the Yellowstone settlement, like Delta Bridge, would mean those papers are active.

5. Answering without a lawyer

Business owners can fall for the trap of answering the lawsuit for their corporations. In New York, corporations have to appear through counsel, though some small claims cases and lower courts might let a non-lawyer appear.

6. Treating a judgment as final

Business owners assume a default judgment is the end of a case. In reality, the New York court might set it aside for an excusable default, if the motion is within one year of when the owner got served with the judgment and notice of entry. Also, a confession of judgment can only get filed in the county where the defendant lived at the signing or now, and businesses count as living wherever they have a place of business.

Usury Law

Usury law only matters if the advance is treated as a loan, not the purchase of future receivables. In 2021, New York’s highest court ruled that a criminally usurious loan to a corporation counts as void from the start. It can’t be enforced to collect any principal or interest. It’s common for New York courts to look at more than just the name or description on the paperwork to see if something is really a loan, instead of something like an advance. The court will take a look at how reconciliation works, whether there was a fixed term, and if the financier kept recourse to collect if the merchant went under.

These Records

Whatever stage of dispute you are in, put together the agreement, bank statements, payment ledger, any communication from the provider and court papers. These records show what you did, and a commercial-financing attorney licensed in the state can use them to assess the situation before you act.

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.