When an MCA merchant defaults, time is your greatest enemy. At David I. Mizrahi Law, P.C., we don't just send demand letters; we initiate a high-speed commercial debt recovery process designed to secure assets before they disappear. From pre-judgment UCC enforcement to aggressive post-judgment collection, we provide the legal muscle that standard collection agencies lack.
Hiring an attorney familiar with MCA agreements ensures compliance with UCC filings, state-specific rules, and the unique nature of merchant cash advance disputes.
Funders often face unresponsive merchants, bounced ACH payments, disputes over contract terms, or debtors transferring assets to avoid repayment.
A lawyer who helps merchant cash advance funders recover money owed to them when a merchant stops making the daily or the weekly payments. Unlike a collections agency, which primarily sends reminders, attorneys can take legal action when merchants default on their obligations.
As your legal partner for MCA collections, we manage the entire process from demand letters and lawsuits to settlement negotiations and judgment enforcement.
Attorneys can escalate matters to litigation and judgment enforcement, which agencies cannot.
If merchants begin ignoring you, refuse to make payments or agree to a reduced payment amount, dispute liability, or attempt to hide assets, legal action becomes the most effective path to recovery.
Most collection agencies stop at "reminders." They can’t file a breach of contract lawsuit or issue a writ of execution.
As your MCA collections attorney, we build every case with the end goal in mind: an enforceable money judgment. By preparing for litigation on Day 1, we create the leverage needed to force settlements.
In the world of recovery, classification is everything. Because Merchant Cash Advance (MCA) defaults are classified as commercial transactions rather than "consumer credit," they fall outside the restrictive scope of the federal FDCPA. However, "commercial" does not mean "unregulated."
Effective February 17, 2026, the enforcement landscape in New York will shift significantly. The Fostering Affordability and Integrity through Reasonable (FAIR) Business Practices Act has fundamentally expanded GBL §§ 348 and 349, moving the state’s primary protection law beyond "deceptive" acts to now include "unfair" and "abusive" conduct.
Commercial debts are governed by contract and UCC provisions, whereas consumer debts are subject to stricter federal oversight under the Fair Debt Collection Practices Act, commonly referred to as the FDCPA.
Because MCA contracts are commercial in nature, funders can use broader strategies without violating consumer debt laws.
When merchants fail to pay, some MCA funders consider using a collection agency. However, hiring a collection attorney offers distinct advantages:
If the debt is small and straightforward, an agency may be sufficient for initial reminders and soft collections.
Having an attorney on retainer provides significant advantages and positions your company for long-term success. As soon as an attorney receives a file, they promptly send out UCC lien notices to all relevant parties. If the merchant and guarantor fail to engage in settlement discussions, a lawsuit can be filed within days, or even hours. This level of speed and efficiency maintains pressure on the opposing parties and greatly increases the likelihood of a settlement.
We employ a structured, high-pressure process designed to locate and secure assets before they are depleted by a defaulting merchant.
We don't just file UCC-1 Financing Statements; we enforce them at the source.
Account Debtor Notifications: We utilize UCC § 9-406 to notify the merchant’s customers, vendors, and payment processors that their payments must be redirected to you.
The Result: This effectively intercepts your capital before it reaches the merchant’s hands, creating immediate leverage for a settlement.
In the Merchant Cash Advance space, speed is everything. We avoid the "discovery trap" by moving for an Expedited Money Judgment whenever possible:
CPLR 3213 (The "Shortcut"): We utilize CPLR 3213 to bypass traditional discovery by filing a Summons and Motion for Summary Judgment in Lieu of Complaint. This allows for an expedited judgment, provided the debt is based on an "instrument for the payment of money only."
The Hurdle: Many MCA agreements do not qualify for this shortcut because usually the payment obligation is conditioned on the merchant’s performance (e.g., the business remaining open or generating revenue).
The Criteria: If the personal guaranty is unconditional and independent of business performance, CPLR 3213 is viable. If the debt is contingent on external factors, it generally is not.
Traditional Summons & Verified Complaint: Even if an agreement is too complex for a 3213 filing, we can still secure a judgment against the guarantor through a standard lawsuit. While this follows the traditional litigation timeline, it remains a highly effective path to recovery.
CPLR 3212: We move for Summary Judgment as early as possible. By providing a bulletproof Affirmation of Facts, we demonstrate that the default was a willful breach of a "True Sale" agreement, not a mere business slowdown.
Pro-Tip: We build our motions around the New York Three-Factor Test, ensuring the court sees your agreement as a "True Sale" (not a loan) by emphasizing: (1) the reconciliation provision, (2) the lack of a finite term, and (3) the lack of recourse in the event of bankruptcy.
If a merchant closes their LLC to open a "new" business under a different name, we don't stop.
Fraudulent Conveyance Actions: We identify "Badges of Fraud" to void the transfer of assets to insiders or new entities.
Successor Liability & Alter Ego: If the "new" business is just the old one in a different hat, we litigate to ensure your judgment attaches to the new entity’s revenue streams.
Once we secure a judgment, we utilize the full power of the New York courts to satisfy the debt:
Restraining Notices: We immediately freeze the merchant’s and guarantor’s bank accounts.
Information Subpoenas: We compel the production of records to locate hidden assets and merchant receivables.
Personal Guaranty (PG) Priority: We prioritize the unconditional guarantee in our pleadings, moving toward bank levies and income executions against the principal’s personal assets.
We handle the Domestication of Foreign Judgments via the UEFJA. Whether the assets are in Florida, Texas, or California, we turn your New York award into a local court order to seize property nationwide.
Our team balances aggressive recovery with professionalism to protect your brand and relationships.
We align our success with yours by offering contingency fee arrangements. This means our legal service fee is only earned when we successfully recover funds for you.
To maintain this performance-based model, clients are responsible for all out-of-pocket litigation costs. These costs include court filing fees, and process server fees when necessary, and are required to initiate and advance your case.
Success-Based Offset: For clients with a high volume of active files, we apply recovered funds from successful settlements to cover the outstanding costs of other pending cases, minimizing your out-of-pocket interruptions.
By partnering with us, you gain a dedicated legal team focused on efficient recovery while you concentrate on funding new deals. We handle the complexities of MCA debt collection so you can focus on business growth.
Our history of favorable outcomes demonstrates our skill in navigating MCA disputes.
We can domesticate and enforce judgments across state lines, ensuring your recovery efforts are not limited geographically.
You’ll receive regular updates and clear explanations, so you’re never in the dark about your case.
Don’t let merchant defaults slow your business. Contact David I. Mizrahi Law, P.C., today for a free consultation with an experienced collection attorney.
We’ll review your case, explain your options, and create a collections recovery strategy designed to secure what you’re legally owed.
Our goal is to act quickly and efficiently to protect your financial interests, maximize collections recovery, and reduce potential losses, giving you the confidence to move forward.
It is time to hire an attorney when a debtor is unresponsive, the debt is high-value, or the case involves complex legal issues or disputes. Hiring the right attorney usually increases recovery success rates.
To help an attorney build a strong case, a creditor should prepare all documents related to the transaction, including contracts, payment history, merchant's bank statements, and communication records.
It depends on the specific attorney and agency, but more often than not, a contingency-fee attorney will cost the same, or surprisingly less, than a collection agency. Additionally, collection agencies have limited authority: they cannot file lawsuits themselves, which is why they often refer unresolved cases to attorneys once they’ve reached their limits.
Yes, we have the ability to enforce judgments and pursue collections across state lines.
Under current CPLR § 3218(b) standards, a Confession of Judgment is only enforceable in New York if the debtor was a New York resident at the time of execution. For out-of-state merchants, "old-school" COJs are generally prohibited.
To maintain a "fast-track" to recovery, we pivot our strategy toward a Settlement Agreement pursuant to CPLR § 3215(i). This mechanism allows for an expedited entry of judgment without a plenary action if the merchant defaults on a payment plan. This commonly used strategy provides funders with a robust enforcement tool that mitigates jurisdictional risks while securing a streamlined path to a Judgment by Default if the merchant breach the workout agreement.
If your pre-funding disclosures were non-compliant, a merchant's attorney may use that as a defense. We audit your disclosure history as part of the intake process to ensure your collection claim is thoroughly reviewed and supported.