Served by Ironwood: Which Documents to Pull Before You Respond

If Ironwood Finance files a lawsuit or arbitration against you, the most important step is to gather the summons and complaint or arbitration notice in its entirety with every page and every envelope. Also find the original signed funding agreement and your personal guarantee, your payment history, bank statements, emails and any notices from the court, Ironwood or its lawyers or collection agents. Don’t call or write anyone until you have this information in hand.

The action against you may be a court lawsuit, or a “demand for arbitration.” Not knowing the difference between the two could cause you to overlook a notice that must be responded to or responded to in the wrong way. Another wrinkle is that Ironwood’s standard cash advance agreement includes an “arbitration” clause, which means all disputes are taken before Brief, an online arbitration service, instead of court.

Generally, you will have only a few weeks to file an answer to a lawsuit or arbitration to keep Ironwood from winning by default.

Know the Exact Date You Need to Answer By

First rule: don’t rely on the envelope date to tell how many days you have to answer. Federal court generally gives you 21 days to answer the Summons and Complaint. If its a Texas county or district court, your deadline is actually 10:00 a.m. on the Monday after 20 days have passed, so know the exact date you need to answer by.

Even if the service looked fishy, or you think the claim is dead wrong, or the amount is clearly made up, don’t count on the court tossing out the claim on its own because of lack of service. That would be like asking the referee to call the penalties. Some objections are lost if not raised properly.

If it’s a Brief arbitration, time limits are governed by the Brief rules. Claim for $15,000 or more, you get 30 days to answer and file any counterclaims. Amount in dispute is less, then you have 15 days to respond in one complete response, with no replies unless the arbitrator wants to hear from you. Brief will extend that time frame by 15 days if you ask after you join the platform. If the amount in dispute is $15,000 or more, missing this deadline leaves you at risk of forfeiting all your defenses and exposure to an immediate default. In a Brief case, all defenses related to arbitration “jurisdiction” and “arbitrability” must be raised with the initial response to the dispute, and missing that deadline could waive some or all of those defenses.

If the lawsuit is in New York state court, CPLR 3016(j) requires that in all consumer credit actions, the plaintiff state the amount of the principal due to date, and the amount paid by the debtor. That would seem not to apply to any claims by Ironwood, however, since it deals with business, not consumer credit. By law, consumer credit is credit to an individual mainly for personal, family or household purposes. A business credit line is outside that definition. An exhibit, such as a contract, attached to a complaint for federal court purposes is deemed a part of the complaint for all purposes.

In New York, to get a default judgment the plaintiff has to submit an affidavit of the claim and amount due. However, a complaint which has been sworn to already can substitute for the affidavit. In a sum-certain claim, the clerk can enter judgment when the plaintiff files an affidavit of the default. But they have to do that within one year of the date the defendant is in default.

Since a merchant cash advance is a business funding agreement, the complaint may show only a total owed and not the math behind it. To check whether the numbers are correct, compare their total with your signed agreement and payment records.

• Pull these documents. One, the funding agreement.
• Two, your business bank statements. There should be an automatic withdrawal of funds taken off your bank statement for some time.
• Three, copies of notifications sent to you about the account falling behind or being accelerated, and any other written communication.

When the lender claims you still owe a balance, the first thing to check is whether they are showing the right initial balance. Maybe they failed to credit all the payments you sent. They could also have overlooked returns of debits and other balances due to you. Do this reconciliation based off the actual payments from your bank statements. Any variances need to be resolved or used as defenses.

In New York, your documents can do a better job of disproving their claim than your answer ever could. You can use that in a motion to dismiss, which should be raised before or in your answer. Otherwise, you lose the defense. In New York, once Ironwood has brought suit, you can serve a notice demanding the plaintiff produce all its records relating to the account.

In a Brief arbitration demand, Ironwood will upload its financial documents at the case initiation. This usually includes the funding agreement, statements about the funded amount, payments made and its notice of default and demand for payment. Review these against the exact copies of your documents to determine whether or not you have a dispute and if so, what its nature and how strong your case is. In Brief, you may file up to 20 documents in support of your arguments, and in response to the opposing party’s arguments. All files will be non-editable and should be PDF. The Brief Rules do not provide for discovery between the parties, so your exchange of documents happens by way of uploading them to the case files. If you have an issue with someone not handing over a document, you can ask the arbitrator to help get it. They can order either party to produce documents.

The Uniform Commercial Code lets you request an account of what is owed on an item secured by your business property. If you make the demand in writing, the secured party must tell you how they calculated the amount due. The secured party must answer the request within 14 days. You can request an account any time, and free of charge, once every six months. But this right doesn’t apply if they bought the receivables.

Write down the names of the plaintiff, every named defendant, the court and case number, and write these on every single document your prepare. If you see more than one name, write them down in exactly the same way they are on the document. This could include your name as business owner. Then look over the rest of the lawsuit to see if your name is on it. If you see it in an attached agreement, that could be the guarantee. The primary difference between a guarantee of payment and one for a performance is the events that trigger them.

Check the date each notice was delivered, how you received it and the name of the person receiving it for you. Include any earlier notices received.

If there’s a negotiation company or brokerage representing you, confirm with them that your attorney has agreed to appear for each individual defendant. Negotiating for a defendant and defending them are two separate jobs. Call Ironwood’s agent if you want. Call around for new financing. Try to settle if you think that’s the best bet. But none of these actions will buy you more time to answer the lawsuit or arbitration.

After an arbitration, Ironwood routinely asks the court to confirm the arbitrator’s decision and convert it into a court judgment. Brief claims that a binding decision by the arbitrator comes in about 45 days. The Federal Arbitration Act lets parties confirm the arbitrator’s decision in court. They have one year to ask for the confirmation. You can’t wait that long to object. To do that, you must serve the other party a motion to vacate or modify within three months.

If you’ve already missed your deadline and you suspect the company or court has obtained a default judgment or default confession of judgment, you should not rely on a phone call to sort it out. Get copies of all documents related to the proceedings from the court and contact a legal pro immediately. One thing to review is whether you signed a confession of judgment in your original agreement.

If you have more than one funder, running a payment plan with one of them does not make your account current with the rest. Keep your documents for each agreement in separate folders. You never know when there could be another lawsuit on the way. Do the same thing if you have more than one case against the same plaintiff.

Sometimes the merchant cash advance business sends a letter to your customers or business associates. Maybe they have done nothing to you directly, but you need that letter in hand and to make copies. Maybe you’ve seen an official letter from the processing bank. Or a UCC filing on your business property. Or a notice from the company assigning your account to Ironwood. Or maybe you got a subpoena. Those are all different documents and you should be clear in your own mind about what you’ve seen. A UCC filing on your business is a public record. You can search UCC records in Texas online. There is a $1.00 fee for each search.

A notice alone may not prove every demand it makes is valid. So get advice about your rights under the merchant cash advance agreement before you change bank accounts or redirect receipts of merchant services, such as receipts from a cash register, credit cards and online payments. Don’t make the mistake of trying to get ahead of the plaintiff by moving assets.

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.