What should I do first if an MCA company sues me?

Find the deadline to respond in the court papers and calendar it immediately — failing to answer in time can hand the funder a default judgment without you ever presenting a defense. Then read the documents to identify the court, the claims, and whether a Confession of Judgment is involved, and contact an MCA-defense attorney quickly. Do not ignore the lawsuit, and don't assume you have no defenses.

Do I have any defenses against an MCA lawsuit?

Possibly. Common defenses include improper jurisdiction or venue, that the 'advance' is actually a disguised loan charging unlawful (usurious) interest, that the funder breached the contract (for example, by refusing legitimate reconciliation of payments to actual revenue), miscalculated the balance, or engaged in unfair practices. Whether any apply depends entirely on your contract and facts, which is why a lawyer's review matters.

Can an MCA company freeze my bank account?

Generally a funder needs a judgment first, after which it can pursue bank levies and liens. The dangerous exception is a Confession of Judgment, which can produce a judgment very quickly and lead to a freeze with little or no warning. Once a judgment exists, frozen accounts and asset levies become real risks — another reason to respond to any lawsuit and get counsel immediately.

Can I still settle after being sued?

Yes, settlement is often still possible and frequently happens during litigation, because collecting a negotiated amount usually beats a long, uncertain enforcement fight for the funder. But your leverage and timeline tighten once a suit or judgment is in play, so coordinate any settlement talks with your attorney and get the terms — including release of liens — in writing.

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.