Sued by Diesel Funding LLC? 7 Steps to Take in the First 20 Days

Don’t ignore a lawsuit, but don’t panic either. It will not simply “go away”. If you ignore the lawsuit, a default judgment can be entered against you. The complaint and summons that Diesel Funding LLC serves on you has to be answered within 20 days of service if the papers were handed to you personally in a New York case. Speak to a qualified attorney as soon as possible, preferably one who has experience in defending merchant cash advance cases.

1. Save every paper

Keep every piece of paper that gets mailed to you, that gets served on you, or that you receive from Diesel Funding LLC or their attorneys. Be sure to keep all documents related to the underlying contracts you signed. Also, save any emails. It will be helpful to keep careful records of your payments to Diesel Funding, LLC. Save everything and then be sure to give it to your attorney.

2. Identify the court

It is important to know what court the lawsuit is pending in. Look at the top of the summons and complaint (first document served). This will tell you the name of the court and, most importantly, its location. Every state has different courts that take care of different types of cases. Your lawyer will want to check on the status of the lawsuit and look at the papers that Diesel Funding LLC filed.

Carefully review the names of all defendants. If you are personally listed, then you need to take action. If you are part of a corporation or LLC, look for the business name in addition to your name.

3. Pin down your deadline

When served with court papers, be sure to figure out what the deadline is for responding. The day of service will determine your deadline. In New York, as noted above, you have 20 days if the papers were handed to you personally. If the papers were served by certain other methods, such as nail-and-mail, you have 30 days to answer the lawsuit. Make sure you give yourself plenty of time to prepare your defense by responding before the deadline, or you could be defaulted in court, costing you time, effort and money.

4. Hire a lawyer who appears

If Diesel Funding LLC sues you, it will be important to have an attorney who appears on your behalf. This generally means that an attorney must file papers, and possibly argue, before a judge in a court proceeding. In New York, a defendant in a case must appear on his own behalf or through his attorney, but a corporation generally must appear through a lawyer outside certain small-claims cases. A lawyer who tells you he will handle the lawsuit for you has to be prepared to appear for you and defend your case.

There are companies that promise to help you work out a settlement or defend against a lawsuit. Some may not actually provide legal services or protect you in the lawsuit.

5. Check the agreement and balance

Look over your contract and take down the important information such as the amount Diesel Funding LLC advanced, and other details about the contract. Review your records of payments to determine how much you have already paid Diesel Funding LLC. This will help you verify the amount of the debt. When reviewing the contract, note if there is a provision that specifies what state governs the contract, also known as a choice of law provision. Another part of the contract to check is how disputes are handled. There may be a clause that specifies that any dispute must be resolved through arbitration or a special procedure.

In one Kings County case, Diesel Funding bought $1,274,150 of a retailer’s future receivables for $850,000, with an individual guaranteeing the deal. The court ended up calling it an MCA and not a loan. The court found that three factors supported its conclusion: Diesel Funding’s ability to reconcile the amount to be repaid, the indefinite term of the repayment, and the question of Diesel Funding’s recourse to collect its funds if the merchant went bankrupt. An experienced attorney can look at the documents to find the real issues.

6. Find the personal guarantee

It is important to check if you gave a personal guarantee for a business debt. Giving a personal guarantee can make you personally liable for the debt.

Also, if Diesel Funding LLC has placed any restrictions on your accounts or otherwise has been contacting your bank, be sure to give your attorney this information. After getting a judgment, a business creditor may serve you or your bank with a restraining notice. Your money (up to twice the amount owed) can get frozen fast. Ask for a copy of the actual notice, and don’t scramble your accounts without advice.

7. Weigh a settlement carefully

Even if Diesel Funding LLC files a lawsuit, it may be possible to settle the case. Before settling a debt you will want to make sure you are not agreeing to pay a sum that you are unable to afford. There are important details about a proposed settlement you need to know.

The time and manner of payment should be stated in writing. Take care that the agreement includes all debts and claims and your personal and business obligations and liabilities. If you decide to settle the case, insist that you are provided a release of any personal guarantee you gave. Getting the lawsuit dropped or dismissed is crucial. If possible, get a satisfaction of judgment or some type of statement from Diesel Funding LLC that it will not take any further action to collect the debt. In the case of Diesel Funding LLC a missed payment could result in severe consequences for your business and for you.

If you miss your deadline, a default judgment against you can happen quickly. There are times when it may be possible to have a default vacated or reversed. An attorney can tell you whether this is feasible. In New York, you can make a motion to set aside a default judgment for excusable default. The motion must be made within one year after being served a copy of the judgment with notice of entry. You need to act as soon as possible.

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.