Can an MCA Funder Attach Your Wages? Federal Limits and Why Your State Decides

A salary can remain exposed after the business closes.

An MCA collector cannot establish a right to payroll deductions by declaring that a guarantee was signed. Personal liability, enforceable process, and the protection attached to earnings require separate examination. The distinction matters most when an owner takes employment elsewhere after a business failure, with a demand against the former company arriving beside a threat against the new paycheck.

1. Whether the Claim Reaches You Personally

Before discussing percentages, obtain the agreement, every guarantee, and the court papers identifying the parties against whom relief is sought. An entity debt and a claim against its owner require different analysis, and a signature may acknowledge a business obligation, assume a guarantee, or appear in both capacities.

Counsel should review and analyze the conditions of any personal guarantee, the alleged breach, and whether the judgment names you as an individual. Collection letters are written in order to make the paycheck feel already lost. The collector summary of the signature page should not become the basis for conceding personal liability, and a guarantor wage exposure runs, if it runs at all, through a judgment naming the guarantor. Before judgment, a funder holds no wage garnishment power. Keep the original demand with its envelope or delivery record.

2. The Federal Ceiling on Ordinary Garnishment

Under 15 U.S.C. Section 1673, ordinary garnishment cannot exceed the lesser of 25 percent of disposable earnings for a workweek or the amount above thirty times the applicable federal minimum hourly wage. The second calculation can produce protection beyond the percentage rule, and that protection is extremely easy to overlook.

That ceiling is not a promise that an MCA creditor receives a quarter of every paycheck. The ceiling protects earnings. It does not reduce the debt. The enforceable amount must also survive the governing state rules, and a gross salary figure does not answer a disposable earnings question. The statute contains exceptions for support orders, specified bankruptcy orders, and tax debts, so an owner carrying several kinds of obligations should identify them first. A support withholding and an execution on a commercial guarantee do not share a calculation.

Ask payroll for a written explanation showing the pay period, the required deductions, and the order used to calculate withholding. That document is extremely useful when the employer has received more than one paper, and the legal objection should address the actual calculation rather than a percentage recalled from a telephone call. No verbal assurance from a collector, even casually given, changes what the order says.

The percentage everyone quotes is a ceiling. Your state decides how much room stands beneath it.

3. New York Income Executions

New York CPLR 5231 provides an income execution framework using a ten percent limitation on installments together with additional disposable earnings and minimum wage protections. The calculation includes a floor tied to the greater of the federal or state minimum wage, so quoting ten percent alone overstates collection rights. Rarely does the quoted percentage match the lawful withholding.

Whether a particular payment counts as covered income requires examination; a contractor invoice should not be assumed to receive the same treatment as an employee paycheck. Independent contractor pay is, if we are being precise, reached by levy or bank restraint rather than the garnishment procedure, which carries different rules.

4. Florida Head of Family Protection

The archived Florida wage exemption statute illustrates a different approach. Its head of family provision turns on support for a child or other dependent: a person providing more than half the support, with disposable earnings at or below 750 dollars per week, is fully exempt from attachment or garnishment, while earnings above that line are attachable only with a signed written waiver meeting the statutory form.

The cited edition is historical, so the current text and its application should be checked before relying on a threshold or signing a waiver. The practical questions remain precise: who receives your support, what earnings are involved, and what document the claimant contends surrendered the exemption. An outlandish reading of a waiver form should not decide the issue. Texas carries a reputation for highly protective treatment of current wages, though the controlling pinpoint was not among the sources reviewed for this article, and counsel must verify it before anyone relies on it. These examples do not compose a fifty state chart. I am less certain about the law of any unexamined state than the federal discussion above might suggest.

5. Negotiation Alongside the Payroll Response

Delancey Street can review an MCA settlement problem while independent counsel examines liability, service, and exemption issues. The company provides settlement services; it is not a law firm representing you in a wage enforcement proceeding.

The two efforts need the same figures. A settlement payment that ignores existing payroll deductions may be unaffordable before the first installment, while a legal response that ignores an available negotiated resolution can leave the financial problem unresolved. Ask the provider to ensure its proposal identifies the obligation, the asserted guarantee, and which enforcement activity the creditor agrees to suspend. Counsel should ensure that any required court filing or payroll instruction follows the agreement. This is where paper victories become payroll realities.

And a written proposal should explain the consequence of a missed settlement payment. Replacing one disputed balance with an acceleration clause deserves attention before signature. The objective is a resolution supported by the income you retain. You take a second job to survive the debt and then the debt follows you to the second job.

6. Records and the Remaining Income

Retain and organize recent pay statements, withholding notices, proof of required deductions, and documents supporting any dependent or exemption claim. Record when each notice arrived and whom payroll identifies as the issuing party.

Do not alter compensation arrangements to conceal income. If a calculation appears wrong, obtain review of the order and protect and preserve copies of everything submitted. There is a particular silence in a payroll office when a second withholding notice arrives in one month, and it falls on the employee to break it with paperwork.

Simply preserve every paper and let counsel decide which one controls. Resist the urge to promise deductions from salary before anyone has established the enforcement posture. Steps you take, or do not take, in the first pay period after notice shape what remains of the paycheck. A first discussion with Delancey Street can begin the settlement assessment while counsel addresses the legal questions.