Speedy Funding Litigation: 5 Reasons Default Judgment Is the Real Risk

The real risk to your business if you’ve been sued is that Speedy Funding gets a default judgment against you. A default judgment is issued by the court if you fail to respond to a lawsuit. When a default judgment is issued, it means that the court has ruled in favor of the plaintiff, without hearing your side. To understand why, you need to know exactly what’s at risk if you ignore that lawsuit.

1. They win without you

If a default judgment is issued, the plaintiff wins. It doesn’t matter whether or not the amount of money they’ve claimed is correct, or if the debt is even yours, if you fail to appear, the judgment will be issued in their favor. In the case of Speedy Funding, that means they could be awarded the total amount of damages requested in the complaint, along with court costs. Without making an appearance in court and putting on an argument or defense, you miss out on the chance to defend your business.

That is because the court simply accepts every single fact contained in the complaint as valid, as if it had been proven true in court. When damages are to be determined, a separate hearing is held to make the decision.

2. Collection starts almost immediately

The rules vary from state to state but, as soon as a judgment is entered against your business, the plaintiff can start collection efforts. That means if you ignore a lawsuit, Speedy Funding could start garnishing your wages, levying your bank account, and taking your property.

Many MCA companies choose to sue in New York. In New York, when a creditor wins a money judgment against a business, its lawyer can issue a restraining notice, and this is a bank account freeze that is done without a judge’s signature. As soon as the lawyer for the judgment holder issues a restraining notice, the bank has to freeze assets in your account up to twice the amount of the judgment. The freeze is in place for a year.

You may also be required to answer questions under oath designed to reveal where all of your business assets are located. Business assets and property, including your work vehicle and real estate may also be taken to satisfy the debt. The plaintiff’s attorney may also send sworn questions to banks, online money services, and anyone who owes you money or holds money for you, including PayPal, Venmo, and tenants.

3. It grows and follows you

Once the default judgment is in place, your business may get hit with additional fees and interest. In New York, once a creditor has secured a judgment on a business debt, it can charge a statutory interest rate of 9% per annum. A money judgment against your business can be enforced in New York for 20 years, and even partial payment, or a written acknowledgment that the debt is still owed, is enough to start the clock running all over again. The judgment can also set up a lien on any real estate the company owns, a lien which can block you from getting a mortgage or refinancing an existing mortgage.

4. The clock is short

When a business in New York is handed a summons in person, it has 20 days to answer. If it is served the summons in some other way, it has 30 days to answer. The thirty day deadline does not run out as soon as you get the complaint. Depending on how you were served, there may be a brief lag before the countdown starts. In those cases, time begins to run 10 days after the proof of service is filed. That’s an incredibly small window, and it’s why you should contact an attorney as soon as you’re handed that summons or learn it has been served on you by other means. Speedy Funding may have gone to a great deal of expense and time to sue you, which tells you that they are ready to move forward.

5. Undoing it is hard

If you fail to respond to a lawsuit, it may be possible to reverse the default judgment and have the clock reset. In New York, you can bring an excusable default motion within one year after you’re served with the judgment and notice of entry, although there’s no deadline if your challenge is based on a claim that you were not properly served. If you show you had a reasonable excuse, and that you still have a valid defense in the case, the courts may reinstate the case. That, however, will be a difficult and time-consuming process, which will likely involve far more business expense than if you hired an attorney the first time around.

If you were never personally handed that summons, you can also argue that even if someone in the office was given it, you never saw it. It’s not a guarantee, though, that a court will agree and toss out the judgment.

Even after judgment is entered, negotiating a deal for payment of all or part of the judgment may still be possible. You should work with your attorney to make contact with the plaintiff’s attorney to try to work things out. If you are able to negotiate a deal to pay the judgment debt, once you’ve held up your end of the bargain, the plaintiff must file a Satisfaction of Judgment, indicating the case has been resolved.

This Is No Time to Delay

Note down the date of service, and calculate the deadline. The deadline is not always clear-cut, so consult an attorney on it. Don’t sit around waiting for something to happen. Immediately begin pulling together all the information you can gather, including copies of contracts and correspondence. Arrange your records, and figure out what documents and information you’re missing. It may be that the case can still be settled and avert the courtroom altogether, but that isn’t going to happen on its own.

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.