Sued by Advance Merchant Services LLC: 7 Things That Happen Next

If Advance Merchant Services LLC is the one suing you, that means you used a “merchant cash advance” (MCA) for your business at one time. This particular company was part of a New York Attorney General settlement that wrote off all the MCA debts that it and related companies were trying to collect.

1. Know who sued you

Before you spend a penny on this or file any court papers, look up who really is suing you (called the Plaintiff). If the summons or notice says Advance Merchant Services LLC, that’s who sued you. It’s one of the 25 companies tied to Yellowstone Capital. Check the name of the plaintiff on the summons to make sure it matches an entity covered under the settlement.

2. The debt is canceled

A 2025 settlement between New York and the Yellowstone Capital family of companies automatically canceled all debt that any merchant still owed to any of these firms as of January of 2025. The settlement canceled debts worth $534,552,724 total. This canceled debt is automatic. You did not have to sign anything. You may have signed a contract that includes a “personal guarantee” of the business debt. The settlement agreement specifically voided those as well.

3. The lawsuit gets dismissed

This settlement dismisses the pending Yellowstone collection lawsuits against the merchants affected. That means if the company filed a lawsuit to collect debt from you, that ends now. The last batch of court judgments was vacated December 18, 2025.

4. Collection has to stop

The settlement agreement required these companies to stop any and all collection efforts. They can’t harass you anymore either. New York has banned the individuals and companies involved from working in the merchant cash advance industry.

5. The restitution window has closed

This settlement came with restitution for merchants too. Payments for that restitution went out April 3, 2026. If you didn’t file a claim by the January 9, 2026 deadline, you’ve missed the opportunity to get a restitution check.

6. Never ignore the papers

It’s true that the lawsuit against you should end. You won’t know for sure that has happened until you are out of the lawsuit. Most importantly, take the papers seriously. Under New York law, you have 20 days to respond after personal service, and 30 days after any other type of service is complete. In New York, a corporation has to respond through an attorney, except in certain lower courts. If you ignore the court summons, you could end up owing for this debt that you don’t owe.

If there’s already a default judgment against you, you have one year from service of the judgment with notice of entry to ask the court to vacate it for excusable default. The sooner you ask, the better your chances will be.

7. If it’s another funder

Your settlement defense won’t work if a Yellowstone company is not the one suing you. Instead, it could be some other funder. However, you still have some defenses. New York’s top court held in 2021 that a corporate borrower can raise criminal usury as a defense against a collector. New York defines criminal usury as a debt that charges more than 25 percent interest annually. If that’s the case, the loan is void at the outset.

Usually, an MCA contract is labeled as a sale, but not all of them actually are. New York courts weigh three factors to decide whether an MCA is really a loan. They look for a real reconciliation provision to lower payments when sales drop, whether the term is truly fixed, and whether the funder can still collect if the business goes bankrupt. The label does not decide what kind of agreement it is.

Gather the MCA agreement, any personal guarantee, bank statements showing the debits, and every message you traded with the funder. Pay close attention to any emails where you asked to lower payments, and what the funder replied. Compare what you received and what you paid back. If it’s more than 25% a year, criminal usury may be a defense here. It’s not automatic.

Almost every MCA contract also has a personal guarantee. That means the funder typically sues the business and the owner in the same lawsuit. That leaves any personal bank accounts vulnerable to seizure after a judgment. Whether the guarantee holds depends on the contract wording and the facts. But raise it early.

New York law changed on August 30, 2019. Since then, a confession of judgment can be filed in New York only against a defendant living in a New York county. A business counts where it has a place of business. If you were sued in a county you have no tie to, you may be able to challenge service or seek a transfer.

Merchant cash advance funders often file UCC liens, and sometimes even send notices to your customers and freeze accounts. Don’t pay anyone who pressures you until you’ve had some advice.

If this debt is really one from a Yellowstone company, then the debt is canceled. However, you still must make sure that happens.

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.