Sued by Qfs Capital LLC? 7 Steps to Take in the First 20 Days

Whatever you do, don’t ignore the summons. Make no mistake, a lawsuit filed against you is a court case in the court system. It is there to stay. The first thing to understand is that you don’t have a lot of time. That means that it is critically important to make moves quickly and make the right decisions based on the unique facts of your case. There is a lot to do in a short amount of time if you are sued. First, save the papers. Second, find the court. Third, work out the deadline. Then, get a lawyer to appear in court. Check the contract for applicable terms. If your accounts are frozen, deal with it. Finally, weigh the possibility of settlement. You don’t have to let the initial fear push you into an unwise decision.

1. Keep every page

This one is so simple that it is easy to forget. Don’t let the seemingly trivial nature of it lead you astray. If you get served in person, keep every page. If someone leaves papers on your door, pick them up and keep them safe. If you receive legal papers in the mail, keep every page and the envelopes. Put all of them in a file folder and put it in a safe place. When you get to step 4 (see below), you will need to have them ready to make copies for an attorney.

2. Identify the court and parties

Look for a case number, the name of the court, the plaintiff and the defendant. Are you listed as a defendant? Are you being sued with other people? These details will play a significant role in helping you decide what to do. See what type of court it is. Is it state or federal? Just because QFS Capital is listed in Fort Lauderdale, Florida, doesn’t mean your business can’t be sued in New York. If the lawsuit is filed by an attorney, write down the name and address.

3. Work out your real deadline

It is critically important to identify your real deadline. Exactly when does your time run out? It depends on the court and how you were served. In New York state court, if you are served in person in New York, you have 20 days to appear; if you are served another way or outside the state, you have 30 days after service is completed. In a federal court, you have 21 days after being served with a summons and complaint. Your deadline is not extended by any phone calls or settlement talks with the person suing you.

”Service complete” is tricky in New York. If the papers were left with someone of suitable age and discretion and also sent in the mail, “service complete” happens 10 days after the proof of service is filed with the court clerk. Don’t count from the day you opened the envelope. Act fast even if you think service was defective. If you don’t raise it right, you could lose that objection.

4. Get an attorney on the case

Run down every defendant and confirm that each has an attorney preparing to defend the lawsuit or file an answer. In New York, outside small-claims-type courts, a corporation cannot represent itself, and must be represented by an attorney. Having a broker, settlement company or negotiator on the case is not the same as having a lawyer in the case for you. It is easy to let your deadline slip by while you are working out a settlement, and you will regret that mistake. Negotiating and defending a lawsuit are separate jobs. If you are negotiating with someone other than the plaintiff, be sure you know who is hired to defend you in the lawsuit if the negotiations don’t work out.

5. Check the contract and the numbers

Gather a copy of the agreement, guarantee, amendments, payment history, and bank statements. Compare the numbers in the complaint with those in your documents. So see if a balance listed on the complaint makes sense, including amounts advanced, amounts collected, credits given, payments and returns made, and fees claimed. A requested balance doesn’t prove the plaintiff’s math is right.

QFS Capital is saying their deal is not a loan, but a “purchase and sale of future receipts.” The label a company puts on its contract doesn’t decide if it is a loan. There are many factors to consider. If QFS claims you missed payments, you might also want to ask when you last requested a reconciliation and check the response.

If you are sued as the owner, pull the personal guarantee and be ready to figure out which acts are supposed to trigger it. Sometimes, a guarantee of an owner or affiliate is simply a guarantee of performance. In other words, it might not be a personal guarantee of payment, but more like a form of extra assurance that a company or affiliate will keep its end of the bargain.

6. Find out what is hitting your accounts

If you can’t withdraw from your own account, you need to work out what is going on fast. You need to get the actual document that freezes the account. There is a world of difference between a UCC financing statement, a notice of assignment of future receivables and a subpoena. Each triggers a different set of consequences. Don’t think one letter proves all the demands are valid. If you move money into a different account or give assets to someone else, that could make matters worse. Get professional legal advice before you try to fix it yourself.

You can check on whether a judgment has already been taken against you. Talk with your attorney. In New York, if you signed a confession of judgment that is used as a basis of judgment, it can only be filed in the county where you live or where your business has a place of business. In most cases, a confession of judgment can be filed up to three years after signing it. If you didn’t answer the summons or appear in court, you need to talk with your lawyer as soon as possible. In New York, you have one year after you are served with a copy of the judgment and the notice of entry of judgment in which you can ask to vacate a default judgment for excusable default. The vacatur is not automatic.

7. Weigh any settlement on paper

If there is a chance of settling the case, you need to weigh that against defending the case in court. Everyone wants to settle, but not everyone will be able to on terms they like. Would you still owe on a personal guarantee? How would it affect you and the business if the deal fell through? Would it affect other creditors? Even a lower payment can still leave a big balance. Be sure you get all the details in writing before you agree to anything. Don’t take anyone’s word for it. Consider the total, dates, who is released, if there are any personal guarantees, how the lawsuit is dismissed, and what happens if you miss a payment. Don’t rush into a deal that will make your situation worse instead of better.

Just because you strike a deal with one merchant cash advance funder, don’t think you are out of the woods on all your MCA deals. Keep separate records for each agreement, and talk with your lawyer if the other funders come calling.

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.