How an MCA Defense Attorney Helps Massachusetts
5 Tasks Counsel Handles First

The counterclaim is the answer most owners never hear about. A Massachusetts funder that sues on an advance walks into a court where the debtor can sue back in the same case.

Counsel handles five tasks first. Each preserves an option that delay would surrender.

Reading the Agreement Against Chapter 93A

Massachusetts declares unfair methods of competition and unfair or deceptive acts unlawful in any trade or commerce. The Massachusetts statute on unlawful commercial practices states the predicate. Both enforcement and private actions build on this section, and it reaches funding terms aimed at businesses as well as consumers.

Non consumer debtors sue under the commercial counterpart when another trader's unfair conduct costs them money or property. The Massachusetts statute on business against business actions states the route. A small company misled by a funder, a broker, or a collector proceeds under this section rather than squeezing into consumer standing. The caption says purchase. The repayment terms say loan. Counsel resolves that split before any negotiation, since absolute repayment points toward a loan whatever the caption claims.

New York courts evaluate substance over caption through reconciliation, finite term, and bankruptcy recourse. The Second Department opinion on absolute repayment gives the test. Its authority stops at the state line, though its method travels well, and counsel ensures the Massachusetts pleading cites Massachusetts law.

Reconciliation and Receipts

Paper promises of reconciliation must survive contact with the bank record. Counsel reconstructs daily receipts against daily debits from complete statements and presses the adjustment the contract promised wherever the record supports it. There are exceptions, though in practice they tend to confirm the rule.

Consider, as a hypothetical, a Boston distributor whose contract devoted eleven pages to remedies and a single paragraph to reconciliation, a paragraph that remitted the owner to a portal that accepted uploads without issuing decisions, uploads that vanished into weekly statements restating the original schedule, a schedule that held steady while December receipts fell by a third, which is why counsel treats the ledger as the principal witness and the portal as an exhibit for the other side. The work is extremely patient and extremely unglamorous.

The adjustment never arrived. Early in 2022 the Federal Trade Commission barred particular MCA providers over charges of deceptive seizures from small businesses. The federal account of that enforcement action concerns named providers only. It voids no valid agreement.

Counsel contacts the bank at once about account classification and available process. The statements arrive, the debits are mapped to their authorizations, and somewhere in that mapping the posture of the whole file changes, since industry guidance distinguishes insufficient funds returns from authorization defects with shorter windows for business accounts. The Nacha guidance on return reason categories describes the taxonomy. No owner should mislabel an authorized debit as unauthorized in order to force a return.

Counterclaims and Collection Defenses

Debtors outside the commercial section may sue by original complaint, counterclaim, cross claim, or third party action for damages and equitable relief. The Massachusetts statute on private actions and counterclaims states the authorization in express terms. A debtor sued on a funding agreement counterpunches in the same case instead of filing elsewhere.

Collector definitions pull counterparties into the licensed conduct regime. The definitional section for the collection agency provisions anchors the licensing framework administered alongside Division of Banks oversight, including the Attorney General debt collection regulations. The Massachusetts statute defining collection agency terms states the scope. Counsel pins the counterparty inside these definitions (a servicer collecting for another account, a buyer pressing purchased paper, a broker turned collector after default) before any repayment negotiation. The demand was the pressure until counsel answered it.

The confession of judgment (which defenders of the advance industry will call a standard term, though few owners could define it at signing) transfers procedural control to the funder before the first debit is missed. New York practice requires a signed sworn affidavit stating the authorized sum and the facts behind the debt, with filing tied to residence. The New York statute on confession procedure states the elements. No Massachusetts confession treatment was verified in the research file, so counsel tests any clause under the selected forum law.

Liens and the Levy Horizon

Massachusetts secured transactions law governs attachment, perfection, priority, and post default enforcement of interests in receivables and equipment. The Massachusetts adoption of secured transactions law states the frame. Counsel tests whether a filing creates a perfected lien with rights against account debtors or an unsecured position to be settled at a discount.

The exemption schedule fences off core personal assets while business liabilities are restructured. The Massachusetts statute on property exempt from execution states the categories. Counsel reads the schedule before conceding anything.

Fees, Scope, and Settlement Authority

Where wind down looms, Massachusetts permits a court in judicial dissolution to appoint receivers to wind up and liquidate, or custodians to manage, with jurisdiction over the company and its property. The Massachusetts statute on receivership in dissolution states the channel. Whether that channel fits an operating company is a judgment call, and counsel is slower to recommend it than the statute sounds.

Canceled balances carry tax residue. Federal guidance treats canceled debt as income in many cases, with bankruptcy and insolvency exclusions under stated requirements that turn in part on entity structure. The federal guidance on canceled debt states the framework. In most files of this kind, though no systematic count supports the impression, the guaranty decides the outcome before counsel is retained. Counsel will review and analyze the funding agreement beside the guaranty before any balance is conceded, even casually.

Owners should bring every agreement with its addenda, complete bank statements, funder correspondence, any filing search result, recent returns, and a chronology of default. They should ask the scope of representation, forum coverage, who appears in court, how fees are computed, and who holds settlement authority. Simply ask who signs the correspondence. Counsel moves to protect and preserve operating cash while the paper is tested, and ensures no statement is made without counsel present, even briefly.

Delancey Street, a business debt settlement company and not a law firm, offers a free confidential review as a parallel negotiation track, while independent counsel holds the legal positions. The Delancey Street description of its practice states the scope. The objective is to ensure the file closes on paper that releases the account, and sound files are built at the intersection of that discipline and the ledger. Every collection file is a record of pressure asserted before it was tested. Counsel tests it.