At a Glance: Your First 72 Hours
| Do this | Why it matters |
|---|---|
| Find the response deadline | Missing it = automatic default judgment |
| Identify the court & claims | Jurisdiction can be a real defense |
| Check for a Confession of Judgment | Changes the speed and strategy entirely |
| Call an MCA-defense attorney | Many offer free consults; defenses may exist |
| Don’t drain or hide assets | Can create separate legal problems |
| Keep the settlement door open | Funders often prefer a deal to a fight |
General information, not legal advice. Lawsuit deadlines are strict and state-specific — talk to a licensed attorney right away.
This is part of our guide on how to get out of an MCA.
An MCA Company Is Suing You. Now What?
Getting served is frightening, but panic and paralysis are the two reactions that actually hurt you. A lawsuit is a process with deadlines and options — and at this stage you still have moves. Here’s how to handle the first few days.
1. Do NOT ignore it
The single worst outcome in any lawsuit is a default judgment — what happens when you don’t respond by the deadline. The court can rule against you without ever hearing your side, and the funder gets a judgment they can use to freeze accounts and levy assets. Whatever else you do, respond on time. Calendar the deadline the day you’re served.
2. Read the papers carefully
Find and note:
- The deadline to respond (often counted in calendar days from service).
- The court and jurisdiction — was the suit filed somewhere that has nothing to do with your business? That can itself be a defense.
- The exact claims and the amount demanded.
- Whether a Confession of Judgment is involved, which changes everything — see our COJ guide.
3. Get an attorney quickly
This is not the moment for DIY. Many attorneys who defend MCA cases offer a free or low-cost initial consultation, and an experienced one can spot defenses you won’t:
- Jurisdiction / venue problems.
- The advance being a disguised loan subject to usury limits, rather than a true purchase of receivables.
- Breach by the funder — for example, refusing legitimate reconciliation of payments to your actual sales.
- Miscalculated balances or improper fees.
Even if you ultimately owe money, a lawyer can often improve the outcome or the settlement.
4. Keep the settlement door open
Litigation and settlement aren’t mutually exclusive — most MCA suits settle. A funder generally prefers a negotiated payoff today over months of legal expense and uncertain collection. With your attorney, you can often negotiate a lump-sum settlement or a structured payoff even after being sued. Just make sure any deal is in writing and includes release of the UCC lien and dismissal of the case. See the settlement playbook.
5. Protect yourself from unforced errors
- Don’t hide or rapidly move assets to dodge collection — that can create separate, serious legal exposure.
- Don’t admit liability in calls or emails with the funder before talking to your lawyer.
- Keep every document — contracts, statements, all correspondence.
What about bankruptcy?
For some businesses buried under multiple positions, bankruptcy is a legitimate last-resort tool that can halt collection (via the automatic stay) and reorganize or discharge debt. It’s a major decision with long consequences and should only be evaluated with a qualified attorney — but it exists, and for a truly unviable debt load it can be the cleanest reset.
Bottom line
Being sued is serious, but it is not the end. Respond on time, read the papers, get an attorney fast, and keep settlement on the table. The owners who get wrecked are almost always the ones who froze and let a default judgment roll over them.
Take stock of your situation: the MCA Debt Relief quiz helps you see where you stand and what to prioritize.