How to File an Answer to an MCA Complaint
3 Decisions and the Defenses to Plead

The answer must meet the complaint that was served, not the dispute the owner wishes had been filed.

A form copied from another MCA case can create problems where none existed, by misidentifying the parties, omitting a supported objection or supplying allegations the defendant cannot substantiate. Preparation runs through three decisions made with counsel, in the order the papers demand. Defenses come from the actual record, and the record is assembled before a single admission is drafted.

The Papers and Every Named Defendant

Obtain the summons, the complaint with exhibits and the proof of service for each defendant. Where the complaint did not arrive with the summons, counsel assesses how to obtain it. Often we see the guaranty signed without a glance at the company papers, and the answer must not repeat that inattention. The company and the guarantor hold different positions, so record every defendant named rather than assume one response covers both. Obtain the proof of service for each one. The file is thin. It decides everything.

Retain the executed financing documents, since the complaint may invoke an amendment different from the version the owner first finds. County clerks reject answers for caption defects without reaching the merits, so the caption deserves the same care as the defenses.

The Deadline Under the Service Method

The deadline runs whether or not the owner has found counsel, like a meter with no attendant, and it is extremely unforgiving. The appearance rule requires appearance within twenty days after service of the summons, with thirty days where service was completed through the specified methods, and the pleading service rule sets the answer on the same measure, twenty days after service of the pleading answered. Never calculate from the date the owner read the papers. The days the owner uses, or loses, before answering will narrow everything that follows.

Where the summons arrived alone, the defendant may serve a written demand for the complaint within the appearance period, and service of the demand extends the time to appear until twenty days after service of the complaint (a demand of this kind does not itself constitute an appearance, which surprises owners who assumed any paper filed counts as showing up). The demand itself is a brief paper with a long effect. The court may extend time or compel acceptance of late papers on reasonable excuse, but a requested extension is not an accepted one. Counsel should protect and preserve the delivery information with the filed affidavit of service, then ensure any stipulation or order extending time exists in writing before the original period expires.

The Allegations Against the Business Records

The complaint demands the full purchased amount at once, and acceleration clauses trigger that balance on default in order to convert a payment dispute into a judgment figure. Before answering, assemble the funding record and the payment ledger for counsel to review and analyze, with credits matched to the periods they satisfied. The ledger in these files runs past two hundred entries before the dispute in our experience, though no two funders format the history alike. Reconcile the claimed balance against payments, credits and any prior modification, and identify the transactions producing any difference.

A transaction with no loan in it cannot carry usury, however unconscionable the price. New York courts test the substance of the advance, not its label.

The label on the agreement decides nothing.

Resist the urge to deny every allegation as a show of resolve. Admit what the records confirm, deny what they contradict and mark the remainder for investigation, since denying the existence of a document only because its legal effect is disputed creates a credibility problem the funder will use against the defense. The funder balance deserves verification rather than deference. An outlandish balance may conceal an extremely ordinary arithmetic error. The balance looks like arithmetic. Behind it sits the whole case.

Defenses belong to counsel selection from this record. A general denial, payment, limitations, jurisdiction objections and loan characterization under the MCA characterization factors in LG Funding all require a factual basis in the file. Any call to the funder about the balance, even briefly, can alter the posture of the claims against the company. The arithmetic stays.

The File Counsel Expects

Days before the deadline, the file should sit complete on the counsel desk. Owners apologize for the state of their records. No apology is needed. Assemble and organize the summons with its exhibits, the proof of service for each defendant, the executed agreement with every amendment and a ledger that ties each debit to a date the owner can explain, with the caption page on top. That is the file that lets counsel work.

The papers arrive on a Tuesday. The clock starts the same day. Delancey Street offers a free confidential initial review of business debt concerns, and a merchant facing an MCA complaint can ask whether the account is eligible for settlement assistance. The company acts as a settlement company and coordinates legal matters with independent counsel, since it is not a law firm. Consultation is where this conversation begins. Simply bring the records as they stand, and ensure no admission goes out without counsel approval. Courts decide cases on papers, and careful papers begin with a complete file.