What Happens If You Ignore an MCA Lawsuit
6 Consequences in No Fixed Order

Silence lets the creditor write the next entries alone.

An owner who disputes an MCA balance may treat disagreement expressed to the funder as a defense filed in the lawsuit. The court has no access to phone calls and no duty to infer them. What the docket holds is what matters, and an empty docket invites the creditor to supply every subsequent page. The six consequences below arrive in no fixed order, since the court, the service history and the creditor choices set the sequence.

The Response Period

The appearance rule gives the defendant twenty days after service of the summons to appear by answer, by notice of appearance or by a motion that extends the time to answer. Where service reached the defendant through specified methods, including service on a state official authorized to receive it, the period runs thirty days after service is complete. The date the owner opened the envelope may differ from the legally relevant date, so preserve the envelopes, the delivery information and the filed proof of service for counsel to review and analyze.

Appearance carries a second effect worth grasping before acting. Under the same rule, an appearance stands as personal service of the summons, unless an objection for lack of personal jurisdiction is asserted by motion or in the answer as the rule provides. A call to the creditor satisfies none of this. Counsel should ensure each named defendant appears in the permitted form, since the company and the guarantor may hold different service histories and different positions.

The Default Judgment Application

The default judgment statute permits the plaintiff to seek judgment where the defendant failed to appear, plead or proceed, and the route depends on the nature of the claim. Where the claim states a sum certain or a sum reducible to certainty by computation, the creditor applies to the clerk within one year after the default with the requisite proof, and the clerk enters judgment for the amount demanded with costs and interest. Where the claim cannot travel that route, the creditor applies to the court, which may assess damages, take an account or direct a reference, with the judgment capped at the amount demanded in the complaint.

Default does not mean judgment appears without an application or supporting record, but the owner should not rely on the creditor failing to complete those steps, since the papers for a business advance arrive organized, with exhibits attached and balances computed to the penny, affidavits sworn and counsel retained, all of it prepared before the summons ever left the office. The call reaches counsel after entry in most of the files we have seen, though the sample is not scientific. The default admits nothing about the true balance. It establishes everything the creditor needs.

Abandonment After a Year Without Action

Delay converts a dispute about money into a dispute about procedure. Where the plaintiff takes no proceedings for entry of judgment within one year after the default, the court enters no judgment and dismisses the complaint as abandoned, without costs, on its own initiative or on motion, unless sufficient cause appears. Sufficient cause can save the complaint, though in practice the showing is extremely narrow. A motion by the defendant under this subdivision does not itself constitute an appearance. That is the posture counsel inherits when a year of silence closes over the file.

Jurisdiction Objections Lost by Waiting

And the objection the owner meant to raise may not survive the wait. A defendant sued far from home may assume distance defeats the action, while a clause naming New York law may be read as a complete answer in the other direction. Neither assumption decides the question. The objection for lack of personal jurisdiction must be asserted in the permitted manner at the permitted time, and an appearance without it stands as service. This is the rare defense that perishes through posture rather than proof. Every such clause was drafted in order to survive exactly this silence.

The company and the guarantor require separate analysis, since service on one is not service on the other and the contract provisions binding each may differ. There is a peculiar silence in an office when the docket shows a judgment the owner never saw. Rarely does a court rescue an objection the defendant never raised. Counsel should protect and preserve every service paper for each defendant, then construct a response that addresses the objection, the timing and the practical question whether any court remains available to hear it.

Interest From the Date of Entry

Under the interest on judgment statute, every money judgment bears interest from the date of its entry, and every order directing payment of money that has been docketed as a judgment bears interest from docketing. Entry is the trigger. The rate and the arithmetic belong to a separate inquiry that counsel must confirm, but the direction is one way. A judgment does not pause while the owner decides what to do.

The Record Counsel Needs First

Before any discussion of settlement or challenge, counsel needs the docket as it stands, the summons and complaint with exhibits, the proof of service for every defendant and the full payment history with any prior settlement documents. A payment record or modification may matter even when the immediate problem looks purely procedural. The version filed with the court must be kept distinct from any draft circulated during negotiation.

Resist the urge to repair the situation with a payment made in haste, even casually, before the record is understood. The steps the owner takes, or does not take, in the first days after discovering the judgment will shape every step in the case against the business. Delancey Street offers a free confidential initial review of business debt concerns, and a merchant facing a default judgment 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 complete file, and ensure no admission about the debt goes out without counsel approval. The silence that felt safe becomes the record, and the record is extremely difficult to unwrite.