Why should it matter whether your business debt settlement company knows Louisiana law? Because Louisiana law is civil code, not common law. Lawyers who draft MCA contracts typically work for New York law firms and are unfamiliar with Louisiana law. So, hire a company that works with counsel licensed in Louisiana and familiar with Louisiana's unique executory process, its community property law, and its 2025 disclosure law for revenue-based financing.
Can a funder use a confession of judgment against a Louisiana business?
R.S. 9:3590 prohibits creditors from using confessions of judgment in Louisiana unless it is for the purpose of executory process. La. Code of Civil Procedure art. 2631 allows a creditor to seize and sell your property "without previous citation and judgment" when the security is evidenced by an authentic act importing a confession of judgment. (For confessed judgments generally, see our article What is a Confession of Judgment and is it still legal?) R.S. 10:9-629 provides that a signed record containing a confession of judgment does not have to be notarized to be deemed authentic for executory process on a UCC security interest. Your MCA agreement almost certainly grants the funder a security interest in your receivables, and if it contains confession of judgment language, the funder may be able to use executory process to seize your property.
If the Sheriff serves you with a notice of seizure, you have fifteen days to file a suspensive appeal and post a bond equal to one and one-half times the balance due under La. Code Civ. Proc. art. 2642. You can also seek an injunction to stop the sale under article 2751. You do not have to post a bond to get the injunction if you can show one of the grounds listed in article 2753, which include that the debt is already extinguished, that enforcement is premature, that you have a liquidated claim in compensation against the creditor (such as unreconciled overpayments), or that the order is not based on sufficient authentic evidence. Seizure of equipment is litigated in the parish where it sits.
What happens when a New York judgment is brought to Louisiana?
The funder can file the judgment in Louisiana with an ex parte petition asking the court to make it executory. See R.S. 13:4242. The Clerk of Court will then send you a notice by certified mail. The judgment cannot be executed on for thirty days after the date the notice is mailed. See R.S. 13:4243. So, you have thirty days to settle the debt before the funder can garnish your bank account. Beginning August 1, 2026, under Act 250, a federally insured bank that holds more than $1,000 of yours, admits it and has no notice of opposition may turn the funds over to the sheriff after 30 days. A competent business debt settlement company will calendar the case from the date of the mailing, not the date the funds are turned over.
How does community property affect a personal guarantee?
If you are married, unless you have agreed otherwise, you are married under the community property regime. If you sign a personal guarantee, you are personally liable for the debt with all community property and all of your separate property, but not your spouse's separate property. See La. Civ. Code art. 2345. Louisiana calls a guaranty a suretyship. A surety does not have the benefit of discussion, which means that the funder does not have to sue the business before they sue you. See La. Civ. Code art. 3045. But you can raise any defense the business could, including a failed reconciliation. See La. Civ. Code art. 3046. Even if you are divorced, the former community property is still subject to the debt. See La. Civ. Code art. 2357. A competent company will ask about your marital regime at the outset and separate your community property from your separate property.
What to Look for in a Louisiana Business Debt Settlement Company
Keep in mind that a Louisiana company's leverage is significantly different from what it markets to a national audience. Make sure it does the following:
- Have a Louisiana licensed attorney on speed dial to file an injunction or suspensive appeal in 15 days if needed.
- Know the terms that, since August 1, 2025, must be disclosed under R.S. 9:3137.10 (total funds provided, amount actually disbursed, total amount to be repaid, total dollar cost to the borrower, method of payment or methodology of variable payments, and cost of prepayment). No APR or factor rate is required.
- Know that usury cannot be asserted by the business or any guarantor under R.S. 9:3509.
- Put any settlement in writing, with a release of all guarantors and a UCC-3 termination of any UCC filing.
R.S. 13:4108.1 makes it clear that a deficiency judgment can be entered on a commercial obligation regardless of whether the seized property was appraised. The other half of the lien issue is covered in what is a UCC lien and can I remove it? While Louisiana has a homestead exemption under R.S. 20:1, the amount is only $35,000 in value. It is better to make a deal before a judgment is entered. Owners comparing a neighboring state can consider business debt settlement in Alabama, where funders domesticate out-of-state judgments rather than use executory process.
Frequently Asked Questions
I signed the personal guarantee and my spouse didn't. What can the funder reach?
Under article 2345 of the Louisiana Civil Code, a creditor of one spouse can reach all community property and that spouse's separate property. The creditor, however, cannot go after the separate property of the other spouse such as inheritance or property owned prior to the marriage.
Can I assert usury against my merchant cash advance in Louisiana?
In most cases, no. Under R.S. 9:3509, a person borrowing for business purposes or a guarantor for the person cannot assert usury as a defense. Furthermore, since August 1, 2025, R.S. 9:3137.10 provides that any charges associated with true revenue based financing are not interest.
How much of my home is protected from a judgment creditor?
Louisiana has a homestead exemption under R.S. 20:1 for a residence on no more than 5 acres within a municipality or 200 acres outside of a municipality. The exemption is only $35,000 in value.
Will my debt be released if the funder seizes and sells my equipment?
Not if the debt was for business purposes. Under R.S. 13:4108.1, the funder can go after the debtor or any guarantor or surety for a deficiency regardless of whether the property seized was appraised. Make sure any settlement includes a written release of all guarantors.