How an MCA Defense Attorney Helps California
5 Protections Worth Understanding

The California MCA file is a disclosure case wearing a collection dispute costume. Counsel strips the costume and reads the numbers underneath.

Reading the Funding Contract

Factor rates conceal what annual rates reveal. Counsel converts every figure in the agreement to a common denominator, compares the cost of capital across stacked advances, and identifies the covenants that accelerate when revenue dips (practice files, not a census, stand behind that method).

Rarely does a disclosure arrive before the signature. Most merchants sign under urgent conditions for reasons always pressing and usually familiar, and the attorney reconstructs after the fact what the funding party never explained at signing.

The financing was not a loan. The disclosure states an APR. Both sentences describe the same transaction, and counsel works the space between them rather than choosing one.

A nine page disclosure packet with an incommensurate price buried on page seven is the artifact counsel expects. The first task is excavation: the attorney will examine and compare the funding amount, the finance cost, the payment schedule, and the security terms, and state the true cost before any negotiation begins. The objective is to ensure no later concession rests on a misunderstood figure.

Disclosure Duties and the Cost of Capital

The California regulator advisory on merchant cash advances confirms that commercial financing disclosure regulations effective December 9, 2022 cover MCAs and factoring alongside loans, with funding, finance cost, APR, and payment information among the required metrics. Counsel measures the funding papers against those metrics one figure at a time, and missing or distorted figures become claims rather than curiosities.

The same advisory notes October 2023 rules prohibiting unfair, deceptive, or abusive commercial financing practices, and it invites businesses to submit complaints. A complaint does not itself cancel debt or suspend litigation, and counsel files it as a complement to defense rather than a substitute.

The California commercial financing marketing statute tightens the regime further, barring deceptive use of the words interest or rate and requiring the APR to follow every later pricing statement during the application process. What the disclosure states, or omits, in that process now carries consequences under either the financing law or the consumer financial protection law depending on coverage. The operative date deserves confirmation against current DFPI guidance before anyone relies on it.

Most MCA disclosures answer every question except the one about price. The APR sits in the packet like a lifeboat bolted to the deck. The factor rate was quoted in order to keep the true cost out of the conversation, and counsel returns it to the center.

I read these packets with a ruler and low expectations.

A federal court decision upholding the disclosures against speech and preemption challenge in December 2023 closed the industry broadest attack on the regime, and counsel cites it where funders question the rules.

The complaint form is online.

Confessions of Judgment After the Ban

The California confession of judgment ban provides that a judgment by confession is unenforceable and may not be entered in any superior court of the state. Since January 1, 2023, a creditor cannot get a confession judgment entered in California, including on business debt, and counsel date checks every confession instrument before describing it as live.

The clerk entered the judgment. No judge reviewed the papers.

That history explains the distrust. Entry was once ministerial once papers were filed, which is why reforms first demanded an independent counsel certificate and why the state later closed the door entirely. Judgments entered before January 1, 2023 keep whatever force they had, so the grandfather clause gets an extremely narrow reading and nothing more.

Out of state confessions present the remaining fight. A funder holding paper confessed elsewhere (who had drafted the clause to select a distant forum, to waive notice, and to authorize entry without counsel present) will seek domestication, and counsel meets that effort with the ban, with waiver doctrine, and with the forum record.

Resist the urge to sign a renewal while the first advance awaits reconciliation. That is the sentence underwriters hope no one reads twice.

Debits, Liens, and Exempt Property

And the debits continue while counsel briefs the exemptions. Automatic withdrawals punish the business that waits for a ruling, so the attorney steadies the accounts in parallel with the legal challenge, documenting each sweep and preserving the statements that prove the pattern.

Lien posture follows the same sequence. Counsel searches the record for financing statements, tests attachment and perfection, and challenges filings that exceed the agreement, since an unsecured funder settles at a different number from a secured one.

The California homestead equity shield protects home equity measured by the greater of the county median sale price, capped at $600,000, or a $300,000 floor, with inflation adjustments. For a guarantor facing a judgment, that cushion decides what the creditor can reach, though the schedule of exemptions runs longer than this section can carry, and retirement funds, recently paid earnings, and insurance benefits each carry their own protections under adjacent sections.

Exemptions exist, though collection practice seldom pauses to honor them without a fight. Counsel asserts them in writing at the outset, before the levy rather than after it.

The statements print in an afternoon. The exemptions take a letter to invoke.

Settlement, Records, and Fees

Settlement from a measured file reflects arithmetic rather than alarm. Counsel collects and compares payoff figures and conditions payment on written releases.

Some owners proceed with a settlement intermediary beside counsel. Delancey Street describes itself as a business debt settlement company based in New York City and focused on merchant cash advance debt, and the company is extremely clear that it is not a law firm, so legal conclusions and courtroom positions belong with independent counsel retained beside it. A free confidential review is the stated starting point.

Bring the agreements, the disclosure packets, and the statements showing the sweeps. Ask who staffs the matter, how fees are computed, and what completes a resolution. Counsel should ensure the engagement letter answers those questions before money moves. Consultation with counsel is where this conversation begins.