Served by Hop Capital? 5 Deadlines That Decide the Case

Sued by Hop Capital or another merchant cash advance funder in New York? Here is when you must answer. If a process server hands the lawsuit to you in person, you have 20 days to appear or answer. Served another way, you have 30 days, counted from when service is complete. Talking about payment does not extend the court deadline. Getting a lawyer to review the lawsuit promptly is the smart play.

A funder can demand an outstanding balance, contact a guarantor, send notices to customers or processors, or sue, all without necessarily taking every possible step. More than one action is possible at once. Court deadlines take priority.

1. The answer date

How and when the funding company served you affects the answer date. Delivery to you personally starts the 20-day clock. If your business is incorporated, service on the Secretary of State’s office starts the thirty-day clock for responding, and service is complete as soon as the Secretary of State is served in person or accepts the electronic submission. The 30-day deadline starts then, not from when you get the papers. Never guess the date! Sometimes the funder does not serve a complaint at the same time the summons is served. If you are served with a summons only, write and demand that the funder serve a complaint within 20 days. Without it, the lawsuit is subject to dismissal.

When the process server hands you papers, put them away carefully. Note down when and how you were served. The papers will often include complaints against both your business and yourself, if you signed a personal guarantee.

2. The removal window

Removal means moving a state-court lawsuit into federal court. But you don’t have forever to make the decision. Getting it out of state court requires filing a notice of removal within 30 days of receiving the initial complaint in state court. Don’t think you have plenty of time to think it over. Every day the notice sits on the corner of your desk is a day less on the calendar. If the funder filed in federal court from the start, you have only 21 days to answer after being served with a summons and complaint, unless service was waived.

3. The service objection

The answer, for all of its importance, is not enough. If papers were served improperly, you must move for judgment on that objection within 60 days after serving the answer, unless the court extends time for undue hardship. Missing this deadline means losing the objection.

4. The missed deadline

If the answer date has passed, the court can extend time for an answer or make the funder accept a late answer, but only if you can show a reasonable excuse for the delay. Don’t sit back and wait.

When served through the Secretary of State’s office, the court cannot enter a default judgment against a corporation until a separate copy of the summons goes to its last known address, at least 20 days before a default judgment is entered. The motion for judgment also must be filed within a year, and if the funding company waits longer than that, the court must dismiss as abandoned unless it is shown to have sufficient cause to excuse it.

That default judgment is the hammer the law gives creditors: if you are sued and do not respond, the court can enter a judgment against you. Whether it can be vacated depends on your reasons, the law, and timing. Don’t wait, bring it to a lawyer right away, the second you know about it.

5. The judgment clocks

Once entered, a judgment starts at least two important clocks: one to appeal, and another to move to vacate the judgment for excusable default. When you are served with the judgment and written notice of its entry, you have 30 days to appeal and one year to move to vacate a default judgment for excusable default. And if the funder takes action after the judgment is entered, like restraining your bank account or levying on your property, it must follow procedures the law requires. Has your bank frozen your funds? Find out exactly which document it received, and get a copy.

If you signed a confession of judgment, your funder may file it instead of a lawsuit. It can’t file the confession any time it wants. In New York, the lender has only three years after you signed it. The confession must be filed in the county where you lived when you signed, or in the county where you live when it’s filed. For a business, “lived” means wherever your place of business is located. If you signed one, check to see if anything has been filed.

While the clock ticks, don’t switch bank accounts, block withdrawals or transfer assets without advice. New financing, settlements or payment plans can help, but agreeing to one without understanding your options can create trouble. Hire a lawyer as soon as possible to make sure you are not missing deadlines or failing to 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.