How an MCA Defense Attorney Helps San Antonio
5 Responses That Contain the Damage

Texas rewrote the rules for covered MCA contracts in 2025, which gives San Antonio owners a defense that starts with the statute. Counsel begins with coverage under the new chapter before arguing about balances, because coverage decides which clauses survive.

An MCA defense attorney tests the contract against Chapter 398, reads the agreement for characterization defenses, steadies the debits, measures Texas exemptions and liens, and negotiates a settlement the business can fund. Most funders know what their confession clauses are worth under the new law. They keep filing them regardless.

Texas HB700 and Covered Contracts

On September 1, 2025, Finance Code Chapter 398 took effect for covered commercial sales based financing, requiring specified cost, payment, security, and broker compensation disclosures for specific offers under $1 million, with existing operators given a registration transition running to December 31, 2026, and with internet providers serving Texas covered even without a local office. The enrolled Texas HB700 text states that framework in full, and counsel reads each San Antonio contract against every element before the first demand letter goes out: coverage, disclosure compliance, broker compensation statements, registration posture, confession language, and remedy limits.

Two provisions matter most. A covered contract containing a confession of judgment or similar provision is void and unenforceable, while the chapter creates no private right of action by its terms, so a regulatory complaint alone vacates nothing and counsel enforces the voidness defense in the proceeding the creditor files (counsel confirms coverage, timing, and remedies for each contract rather than assuming the chapter applies). Adopted rules add that automatic deposit account debits require a perfected first priority interest in the recipient accounts receivable, which gives counsel a second front against debit practices that outrun their paperwork. Registration is not endorsement, and counsel treats it as a compliance fact rather than a character reference.

Reading the Advance Agreement

The confession clause is void where the statute covers the contract.

Counsel reviews and analyzes the purchase price, the factor rate, the reconciliation procedure, the personal guaranty, and the UCC filing consent, since what each term opens, or closes, decides the later argument. Texas sets a default maximum rate of ten percent per year unless another law provides otherwise, with interest aggregated under the actuarial method, which matters when MCA style fees are recharacterized as interest. A New York appellate decision often cited in these disputes measures an MCA by economic reality, including absolute repayment, genuine reconciliation, finite term, and recourse in bankruptcy. The LG Funding appellate opinion on MCA characterization supplies the controlling insight, and federal enforcement history shows regulators treat disguised credit terms as deception: a 2022 federal action imposed a permanent industry ban on an MCA operation over deceptive terms and unfair collection practices, as described in the federal MCA enforcement release.

Deception theories supplement usury and coverage defenses. Texas declares unlawful false, misleading, or deceptive acts in trade or commerce across a long illustrative list, enforceable by the state and by private suits. The Texas deceptive trade practices statute states that prohibition, and counsel preserves misstatement claims against the funder, the broker, and the collector alike. The posture that settles these files is documentation against velocity.

Debits and Bank Posture

And the debits continue while counsel reads. That is the velocity the documentation must overcome. Stacked advances produce overlapping daily withdrawals, while correspondence alternates between cure demands and judgment threats. Urgency language fills these letters in order to extract payment before the exemption math is done. The stacked debits work the way overlapping prescriptions work in an unfamiliar pharmacy: each valid on its own terms, dangerous in combination, and no single issuer watching the interaction.

Return codes distinguish insufficient funds, uncollected funds, and authorization questions, and business accounts do not carry consumer timing protections, so counsel ensures the owner calls the bank at once about each transaction. Resist the urge to answer the next demand without preparation: any statement made without counsel present narrows the later negotiation. No engagement letter authorizes disguising an authorized debit as unauthorized, since false statements compound a commercial dispute into something far worse.

Exemptions, Liens and Settlement

Texas shields the household first. Itemized personal property stands exempt up to $100,000 for a family and half that figure for a single adult, with current wages for personal services, health aids, and support payments fully exempt outside those caps, and the homestead stands exempt from seizure except for enumerated encumbrances that a business guaranty never resembles. The Texas personal property exemption statute states the caps and categories. The homestead covers that house, not the business that pays for it, a distinction counsel draws at the outset because collectors prefer to blur it. The balance is undisputed in many files. The collection method remains negotiable.

Liens and collection tools receive the same reading. After default a secured party may take possession of collateral without judicial process only where no breach of the peace occurs, and counsel tests default and enforceability before conceding anything. The turnover statute (which creditors read as an outlandish license to seize first and sort later) still cannot reach exempt property, and third party collectors may not operate without the required surety bond on file. Negotiation is extremely sensitive to paper rather than percentages: counsel seeks a written agreement stating the compromised balance, releases for the business and each guarantor, and termination of financing statements, matching each stacked position to its own release.

The exemption math is preliminary in every first conference, and later filings revise it. Settlement funds need a tax review first, since canceled debt can be taxable subject to bankruptcy and insolvency exceptions. The IRS guidance on canceled debt as income states the general rule, and counsel ensures the owner takes qualified tax advice before treating forgiven balances as a windfall. Delancey Street describes itself as a business debt settlement company, not a law firm, offering MCA account resolution with a free confidential initial review, coordinating with independently licensed counsel for legal work. The Delancey Street account review request starts that commercial conversation. A first call costs nothing and assumes nothing.

Records, Fees and Scope

Counsel collects and examines the signed agreement and every amendment, the ACH authorization, broker messages, funding and payment ledgers, bank statements, and any suit papers received (counsel reads the exhibits before the cover letter, a habit that has survived every file organization system encountered so far). The same conference covers fees, costs, and scope. Often the missing amendment decides the case, which is why the document demand precedes the strategy memorandum. An attorney who tests coverage under the new chapter, reads the agreement, steadies the debits, shields the household, and prices the engagement in writing has supplied an extremely solid defense, and documentation outlasts pressure.