A Mulligan Funding Lawsuit: 6 Ways These Cases Usually End

When Mulligan Funding sues a business owner, the case almost always goes in one of a handful of directions: The defendant loses by default, the two sides work out a payment plan, the defendant hires a lawyer and fights the case, a judgment gets challenged, the lender collects on the judgment over a matter of years, or the defendant files bankruptcy to pause the case. The direction the case takes is mostly determined by what the defendant does early on, before the response deadline.

1. Losing by default

As soon as you’re served, the deadline starts to file a response. In California state courts, it is 30 days, but there are exceptions, and in federal courts it’s 21 days. In California, the two sides can agree to push the deadline back by 15 days. Get it in writing, to be safe. If you miss it, the lender can ask for a default judgment against you. This makes fighting the case later a much longer slog. Calls to the funders and even settlement talks do not extend that deadline; you must file a response before time runs out.

In one federal case in New York, the defendants never responded to the case. The court then entered a default judgment against the company for $169,594.45. But when the lender asked for a default against the individual co-defendant, the court refused the request for now because the motion missed some of the procedural rules, including the Servicemembers Civil Relief Act. The lender did get 14 days to fix their filing and try again.

2. Working out a settlement

Settlement talks are possible, but weigh any settlement or payment plan not just against your odds in court, but also your cash flow in the months to come and your other creditors. A lower payment can still leave a big balance. Miss one payment and you could be in worse shape than before.

A written settlement plan should spell out all of the following: the total of payments, each payment amount, and the payment dates. Check to make sure the agreement releases the business and the individual from all claims. Check if the lender will sign a stipulation to dismiss the case when you pay them. Check if the agreement frees up any funds in the bank that were frozen. Make sure you know exactly what you need to do, and what will happen if you miss a payment. When a debt is settled for less, the IRS generally treats the forgiven part as taxable income, unless an exclusion applies. Exclusions can include bankruptcy and insolvency.

3. Fighting the case

Responding to the case is just the first step. Your lawyer can review the contract, compare your payments to the lender’s claimed amount, and any credits due. Ask for documents in discovery to be sure you have all the facts. Remember that a demand for a balance does not prove the balance is right.

A lawyer can examine other potential problems with the paperwork: how the defendants were served, and the forum selection and governing-law clauses, which tell which state’s rules and courts apply. A lawyer would also note whether the individual was under a personal guarantee. Mulligan Funding says most of its loans are issued through FinWise Bank, which may explain why that bank’s name is on some paperwork. A motion to dismiss does not always mean you will win.

4. Challenging the judgment

If there is already a judgment, you can get a copy from the court and learn why it was entered. In a default judgment, review if you were served on time and what you missed. In a confessed judgment, review whether you signed it. The lender may object, and the court may refuse to reopen the case.

Courts may review their own judgments, but there is a catch: the review must come in a reasonable time. In a federal case, a motion to undo a judgment for mistake, new evidence, or fraud generally must be filed within one year of when the judgment was entered. As for confessed judgments, in New York, since August 30, 2019, confessions of judgment are forbidden against borrowers who live outside New York.

5. Paying off a judgment

A judgment can be paid off over months and years. Once the lender gets a judgment, they can collect it by freezing and levying bank accounts or filing notices on customers or payment processors to force them to pay the lender instead. A notice telling your customer or payment processor to pay the lender can arrive even before any judgment is entered. If you get one, don’t assume it is valid. Check who sent it, what the demand says, and what authority it relies on. Get the actual bank levy or payment order before you move funds or close accounts. Waiting to resolve a debt can be costly. In California, a money judgment against a business earns 10% interest a year on the unpaid balance, generally lasts 10 years, and can be renewed any number of times.

6. Pausing it with bankruptcy

A bankruptcy petition generally puts an automatic freeze on collection lawsuits over debts from before the filing. There are exceptions, and the freeze has limits. For some repeat filers, the time for the pause, or stay, can be limited or even waived.

Respond on time, and save everything, including the summons and complaint, any envelopes, settlement offers, copies of the agreement you signed, the payment history, bank notices, and anything else you received, including from the lender. Remember the person negotiating payments is not necessarily your lawyer.

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.