Predatory Lending Defense
When a business needs capital fast, the documents come fast too. Funders count on that. We defend businesses caught inside abusive cash advances, confessions of judgment, blanket liens, and other funding structures designed to remove your defenses before the dispute starts.
The Predatory Lending Problem
Most businesses that come to us about a funding problem did not understand the deal when they signed it. The paperwork was dense, the timeline was short, and the money landed in the account before anyone had a chance to ask the right questions. By the time the daily debits started straining payroll, the funder already had a confession of judgment ready to file, blanket liens recorded across every asset, and a personal guarantee on the principal.
Predatory business lending is a category, not a single product. It includes merchant cash advances structured to look like receivables purchases. Confessions of judgment held in reserve and filed the moment a business falls behind. Daily ACH withdrawals that drain operating accounts faster than revenue replaces them. Stack-on-stack advances that turn one obligation into five. UCC liens filed so broadly that they shut down access to legitimate financing. The common thread is contract structure engineered to strip away the borrower's defenses before any court ever sees the dispute.
Our job is to give those defenses back. We move to vacate improperly entered judgments, challenge usurious structures and recharacterize purported purchases as loans, free frozen accounts, push back on overbroad UCC filings, and negotiate from positions of real leverage. The first conversation is usually about what you actually signed and what the funder actually has the right to do, because the answers to those two questions are not always the same.
Merchant Cash Advance Defense
Merchant cash advances are the most common form of predatory funding we see in our practice. They have their own playbook, their own legal terrain, and their own defenses, so they get their own treatment below.
The MCA Problem
Merchant cash advances were designed for businesses that needed quick capital. But the industry has evolved into something far more aggressive. Daily or weekly withdrawals drain operating accounts. When a business falls behind, funders file confessions of judgment, freeze bank accounts, and stack additional advances on top of existing ones. Many businesses discover they have signed away rights they did not understand, including confessions of judgment that allow funders to obtain judgments without any court proceeding.
How We Defend MCA Cases
Vacating Confessions of Judgment
New York's 2019 COJ reform created new grounds for vacatur. We challenge improperly filed confessions, assert fraud and misrepresentation defenses, and move to unfreeze accounts. For out-of-state businesses, the reform provides particularly strong protections.
Usury and Recharacterization
If the MCA agreement guarantees repayment regardless of business performance, it may not be a true purchase of receivables. New York courts have increasingly recharacterized such transactions as loans. If the effective interest rate exceeds New York's usury caps (16% civil, 25% criminal), the entire agreement may be void and unenforceable.
UCC Lien Challenges
MCA funders routinely file blanket UCC liens that interfere with your ability to obtain other financing or operate normally. We challenge unauthorized, overbroad, or fraudulently filed liens and pursue damages where appropriate.
Account Freeze Relief
A frozen bank account can shut down a business overnight. We move to vacate restraining notices and release frozen funds, often on an emergency basis. Time matters in these cases, and we treat them accordingly.
Settlement and Restructuring
Not every MCA case needs to be litigated to conclusion. When the math supports it, we negotiate settlements that reduce the total obligation and establish workable payment terms. But we negotiate from a position of strength because funders know we will litigate if the terms are not fair.
MCA Defense Resources
- What Is a Merchant Cash Advance and Is It Legally a Loan?
- Confessions of Judgment in MCA Cases: Your Rights
- Your Bank Account Was Frozen by an MCA Funder: What to Do
- MCA Usury and Recharacterization: When an MCA Becomes a Loan
- UCC Liens Filed by MCA Funders: How to Challenge Them
- Settling an MCA Dispute: Strategy and Considerations
- New York's 2019 COJ Reform: What It Means for MCA Defendants
- When MCA Funders Sue: Defending Collection Actions
Common Questions
What is a Merchant Cash Advance?
A Merchant Cash Advance (MCA) is a transaction where a funder purchases a percentage of your future receivables at a discount. It is structured as a purchase agreement, not a loan, to avoid usury laws. However, if the MCA contains a fixed repayment amount with no true reconciliation, courts may recharacterize it as a usurious loan.
Are Merchant Cash Advances legal in New York?
Yes, legitimate MCAs are legal. However, an MCA that functions as a loan in disguise, with fixed daily payments, personal guarantees, and no true reconciliation based on actual receivables, may be recharacterized as a usurious loan under New York law. Criminal usury in New York is any rate exceeding 25% annually.
Source: NY Penal Law 190.40 (Criminal Usury); GOL 5-501
What is a Confession of Judgment and is it enforceable?
A Confession of Judgment (COJ) is a document you sign allowing the MCA funder to enter a judgment against you without filing a lawsuit. Since 2019, New York law prohibits out-of-state lenders from filing COJs against out-of-state borrowers. COJs filed in violation of this law are void and can be vacated.
Source: NY CPLR 3218; 2019 Amendment (Ch. 575)
Can I stop daily MCA withdrawals from my bank account?
Yes. You can revoke the ACH authorization by contacting your bank in writing and requesting a stop payment on all future debits from the MCA funder. The funder may claim this is a breach, but protecting your operating cash flow is often necessary to keep your business running.
What happens if an MCA funder freezes my bank account?
If a funder obtains a judgment (often through a Confession of Judgment), they can serve a restraining notice on your bank, freezing the account. You have the right to claim exemptions for certain funds. You should immediately seek legal counsel to challenge the restraint and unfreeze the account.
Source: NY CPLR 5222; CPLR 5222-a (Exemption notices)