Is it legal for a debt settlement company to handle my case in North Carolina?
There is an interesting statute in NC called the Debt Adjusting Statute, G.S. 14-423. It states that Debt Adjusting includes Debt Settlement, and if there is a paid middleman and you pay any fee before the settlement is reached or before all services have been provided, it is considered Debt Adjusting, which is illegal under G.S. 14-424 (it's a Class 2 misdemeanor).
The statute states a debtor is an individual who resides in NC. This technically means the statute would not apply to an LLC as the debtor. However, the majority of MCA funding packages require a personal guaranty, making you personally responsible for the debt alongside the LLC, making you an individual debtor. We found no case applying this statute to an MCA settlement, but it may be something to consider when searching for a provider. Also note, the statute does not apply to an attorney licensed in NC who is not employed by a debt adjuster under G.S. 14-426. To learn more, read about how providers charge you.
Can you argue your MCA is a usurious loan in North Carolina?
Probably not. G.S. 24-9 indicates that if the loan is for $300,000 or more, or if the person for whom the loan is made is not a natural person, or if the loan is primarily for a business purpose of an individual, a claim or defense of usury is prohibited. So, in NC, an LLC or Corporation is likely exempt, and so is a sole proprietor borrowing primarily for a business purpose.
Many national websites list the usury defense as settlement leverage. However, in NC, this defense may not be available. Additionally, G.S. 24-1.1 indicates that the usury defense may not be available if the loan amount is more than $25,000. However, G.S. 24-9 states that that statute is overridden if the credit is extended primarily for a business purpose. Lastly, the majority of MCA funding agreements state that the funding agreement is subject to New York law.
How fast can a funder use a confession of judgment against you in North Carolina?
In NC, according to Rule 68.1, a clerk of the superior court may enter a judgment without the commencement of an action if a party submits a signed, verified, or sworn statement naming each party, stating the North Carolina county where each resides or may be found, and concisely showing why the party submitting it is or may become liable. The entry of the confession of judgment by the clerk shall constitute conclusive evidence that Rule 68.1 has been followed.
Since a 2019 New York amendment bars funders from filing confessions of judgment against out-of-state residents there, your funder would file the confession of judgment you signed (the affidavit) in an NC county, such as the one where you reside. Once they file that, you have 10 days to appeal it according to G.S. 1-301.1. The judgment will not be stayed unless you post a bond. However, if they obtain a judgment in NY and domesticate it in NC, you will have 30 days to file a motion or notice of defense and it will automatically stay the judgment without having to post any security. Even if you signed the confession of judgment as the president of the company, the NC Court of Appeals held in Shapemasters in 2016 (unpublished) that an owner was personally bound by a Confession of Judgment that named him and stated he was jointly and severally bound. To learn more, read about how a Confession of Judgment works. A good provider should be able to tell you this on the first call.
What can a funder take from a North Carolina guarantor?
Mostly bank accounts and property, less relatively small exemptions in NC. The exemptions are in G.S. 1C-1601, and they are low by national standards:
| Exemption | Amount |
|---|
| Homestead | $35,000 ($60,000 for an unmarried debtor 65 or older whose co-owner spouse or joint tenant has died) |
| Wildcard (if you do not use all of the homestead) | $5,000 |
| Motor vehicle | $3,500 |
| Household goods | $5,000 plus $1,000 per dependent, up to an extra $4,000 |
| Tools of trade | $2,000 |
| IRAs and retirement plans | Exempt |
Keep in mind that you have to timely claim exemptions pursuant to G.S. 1C-1603, within 20 days of notice of your right to claim exemptions by filing a schedule of exemptions or moving for a hearing to claim exemptions, or you waive them. Also important is the concept of entireties. Property owned as entireties cannot be encumbered by one spouse without joinder in writing of the other pursuant to G.S. 41-58, so make sure your provider asks whether your spouse signed the guaranty.
Will your case end up in the North Carolina Business Court?
Probably not. Per G.S. 7A-45.4, a contract dispute must involve at least a million dollars and all of the parties must consent for the court to take the case; a receivership must be for a general receiver and over 5 million dollars in assets for the Business Court to have mandatory jurisdiction. Otherwise, cases are filed in either the docket maintained by the clerk or in superior court. Comparing neighboring states? See the best business debt settlement companies in Virginia. Virginia has registered providers of sales based financing, unlike NC.
Frequently Asked Questions
Can a funder garnish my wages in North Carolina?
Not in most instances. G.S. 1-362 exempts your wages from 60 days before an order in supplemental proceedings in an amount needed to support you and your family, but they can levy on bank accounts.
Is my house safe if only I signed the personal guaranty?
If you own it as tenants by the entirety, it's probably safe. G.S. 41-58 says neither you nor your spouse can encumber property owned as entireties without joinder in writing of the other. However, if the house is in your name only, you only get a $35,000 homestead exemption in NC.
How long does a North Carolina judgment last?
As long as the judgment is docketed, it's a lien on your real property in that county for 10 years per G.S. 1-234. They have ten years to sue on a judgment per G.S. 1-47(1). The legal rate of interest in NC is 8%, but if the contract rate continues post-judgment, the contract rate applies per G.S. 24-5.
Does North Carolina have a commercial financing disclosure law?
According to Venable's survey of state commercial financing disclosure laws published in March of 2026, NC doesn't have one. Several states do (VA, GA, TX, UT, CT, etc.) though, so keep an eye on whether the NC General Assembly enacts one.