The best business debt settlement companies in Indiana are the companies that use Indiana’s ban of confessions of judgment to get more time to settle before the Merchant Cash Advance funder can domesticate a judgment from a different state and freeze your accounts, don’t accept stipulated judgments in a settlement, and are bonded or supervised by Indiana counsel.
Are confessions of judgment illegal in Indiana?
It is illegal for anyone to get a person to sign a warrant to confess judgment in advance of the debt being due (IC 34-54-3-2). A contract, stipulation, or power of attorney given in advance of the cause of action accruing is also void (IC 34-54-3-3). It is a Class B misdemeanor under IC 34-54-4-1 to knowingly procure the execution of a cognovit note, to hold a cognovit note as payee or assignee, or to enforce in Indiana a judgment from a different state based on a cognovit note.
Once the debt has accrued, a debtor can still appear before a court with the creditor’s consent and confess judgment, using an affidavit that the debt is just and owing (IC 34-54-2-1). This confession of judgment operates as a release of errors. Funders use this section to regain the leverage they lost. Learn about confessions of judgment in different states.
What do MCA funders do instead when they can't use a COJ in Indiana?
After a default, the funder can use the UCC filing it has against the debtor’s accounts receivable to redirect revenue under UCC 9-607. A funder suing the business and the personal guarantor will likely do so in New York under the MCA’s forum selection clause. Under the Uniform Enforcement of Foreign Judgments Act, the funder files an authenticated copy of that judgment with the clerk of any court of record in any Indiana county, and it will be treated as an Indiana judgment. The funder must file an affidavit and notify the debtor, and can’t execute until 21 days after the judgment was entered in the original state (IC 34-54-11-2).
Next, proceedings supplemental can get a court order freezing the debtor’s individual or joint accounts. If the debtor asks, a hearing on exemptions is available within 5 business days. The period between the funder’s first demand and a domesticated judgment is the time a debtor in Indiana has to settle the debt. Learn about the procedure for settling business debt in Marion County, Indiana.
Does Indiana's usury or loansharking law make my MCA illegal?
Likely not. Indiana’s loansharking law applies to a loan charging over two times the 36% tier in IC 24-4.5-3-508, so over 72% per year. That is a Level 6 felony, or Level 5 if force is used. IC 35-45-7-3, however, limits the chapter to consumer loans, sales, and leases, consumer mortgages, and other loans only if force or the threat of force is used to collect. Indiana’s 25% cap on consumer related loans likewise covers only loans to an individual for personal, family, or household purposes.
Most MCA contracts are governed by New York law, which has a criminal usury rate of 25% and a court test to recharacterize a Merchant Cash Advance as a loan, explained on our New York business debt settlement page. Be wary of providers who sell their services with Indiana’s loansharking law.
What can a funder take from a personal guarantor in Indiana?
A lot, given Indiana’s thin exemptions. The Indiana Department of Financial Institutions updated the exemptions by rule effective March 1, 2022 (750 IAC 1-1-1), with the next update due by March 1, 2028.
Indiana Exemptions for Individual Guarantor in 2026
| Asset | What's protected | Source |
|---|
| Residence | $22,750 | 750 IAC 1-1-1 |
| Other Real Estate or Tangible Personal Property | $12,100 | 750 IAC 1-1-1 |
| Bank Accounts, Cash, or Other Intangible Property | $450 | 750 IAC 1-1-1 |
| Home held as tenants by the entireties | Exempt unless both spouses are liable on the debt | IC 34-55-10-2(c)(5) |
| Qualified retirement plans and IRAs | Tax deferred contributions and earnings | IC 34-55-10-2(c)(6) |
| Wages | Garnishment capped at the lesser of 25% of disposable earnings or the excess over 30 times the federal minimum hourly wage | IC 24-4.5-5-105 |
Because so little in a personal bank account is protected, domesticating a judgment or obtaining a bank hold can be valuable tools for the funder. A limited liability company or corporation is not entitled to these exemptions, which are provided to individual debtors (see IC 34-55-10-2).
How should you choose a business debt settlement company in Indiana?
Whether before or after a judgment has been filed, ask any business debt settlement company you are considering:
- Do they have Indiana counsel who can respond to a domesticated judgment or a bank hold?
- Will they avoid taking a settlement that includes a confession or stipulated judgment if you don’t make the payments?
- Will they collect fees before settling your debt? If so, do they have a surety bond or letter of credit?
- Will they evaluate a usury challenge under the state law the contract chooses?
The Federal Trade Commission’s prohibition on advance fees in debt relief only applies to consumer debt, so it won’t help you. See our discussion of how much business debt settlement costs.
Business Debt Settlement FAQs in Indiana
Can a funder use a New York or Pennsylvania confession of judgment against my Indiana business?
New York revised its confession of judgment statute on August 30, 2019, to allow filing only in the county where the defendant resides or conducts business. So an Indiana-only business with no New York location should not face one there. Even if a funder obtains a cognovit judgment in another state, an Indiana court cannot issue execution on the judgment, and it cannot become a lien on real estate in the state. Attempting to enforce such a judgment in Indiana is a Class B misdemeanor.
Does owning my house with my spouse protect it from the guarantee?
Real property held as tenants by the entireties is exempt from a judgment against one spouse except for a debt for which both spouses are liable. If your spouse did not sign as a guarantor, the home is exempt; if your spouse also signed, it is not.
Does a business debt settlement company need a license in Indiana?
Indiana’s debt management statute only applies to personal, family, or household debts and does not apply to debt settlement. However, the Credit Services Organizations Act defines debt settlement services without an express consumer-purpose limit and only allows up-front fees if the debt settlement provider has a surety bond or letter of credit. Whether it covers a company settling merchant cash advance debt for a business owner is unclear, so ask.