The best debt settlement companies in North Dakota for business debts are those that hold a license with the state’s Department of Financial Institutions (DFI) where required, know how out-of-state MCA judgments get filed in ND counties like Cass or Burleigh, and know when to make offers based on the nature of your receivables.
Do business debt settlement companies in North Dakota need a license?
On its face, ND’s debt settlement statute reaches debts of a ND business, so the companies settling them must be licensed. It’s unlawful for an unlicensed person (a term that includes corporations and LLCs) to act as a debt settlement provider, and the activity counts as happening in ND if the debtor resides here. Nothing limits it to “consumer purposes.” See N.D.C.C. ch. 13-11. That said, since MCAs are generally secured by a UCC lien and the statute talks about negotiating “unsecured debt,” I can’t say for certain whether DFI applies it to companies settling MCA debts. Call DFI at 701.328.9933 and check a company’s license at NMLS Consumer Access.
A licensed provider must post a $50,000 bond, not charge “enrollment fees” or other upfront fees, not obtain a power of attorney from you to negotiate on your behalf, and not make promises to stop lawsuits and garnishments. See our page on the cost of debt settlement. A contract with an unlicensed provider is void, and operating without a license is a class “C” felony. You can sue an unlicensed provider for restitution or $2,000 + attorney’s fees.
How does an MCA funder enforce a judgment against a North Dakota business?
In most cases, the funder sues where its contract’s forum selection clause points, then files the judgment in a ND county like Cass or Burleigh. Since New York amended CPLR 3218 in 2019 to prohibit confessions of judgment in any county other than the one where the defendant resided, a funder can’t use a New York confession of judgment against you. It must sue first. To file an out-of-state judgment in ND, it follows the Uniform Enforcement of Foreign Judgments Act (UEFJA), N.D.C.C. ch. 28-20.1:
- File an authenticated copy of the judgment with the clerk of any district court; the judgment will then have the same effect as a judgment entered in ND; and
- File an affidavit with your name and last known address, and the clerk mails you notice of the filing.
N.D.C.C. § 28-20.1-03(3) bars execution or other enforcement until ten days after the judgment is filed. A good debt settlement provider will act during that ten-day period, because afterward the funder can serve a garnishee summons on your bank. A garnishment may not be brought until there’s a judgment, see N.D.C.C. § 32-09.1-02, so the funder’s best chance to collect is when it domesticates its judgment. See our page on how to settle an MCA after judgment, or our page on MCA litigation in Alaska for the same two-step process.
Why do lumpy receivables change the settlement strategy?
North Dakota businesses that have lumpy revenue, which is common for grain haulers, farm-related suppliers, and oil-related businesses, are especially exposed because funders can time their garnishee summons to coincide with a large deposit. While the MCA is taking a set amount via ACH each day or week, a good provider watches when your money arrives and makes offers accordingly, while also sending the funder a reconciliation request. See our page on how to use a reconciliation clause to reduce your MCA payments.
Can an MCA funder take your house or equipment in North Dakota?
Your house is safe unless it has more than $150,000 in equity. N.D.C.C. 47-18-01 exempts the land your family lives on, with the dwelling and improvements, up to $150,000 over liens, free of judgment liens and with no declaration required. Above that, a creditor may petition the district court in your county to have three disinterested residents appraise the property.
However, your business assets may be less protected under N.D.C.C. ch. 28-22:
| Type of asset | Amount exempt in North Dakota |
|---|
| Home equity | $150,000 (or alternatively $25,000, which can be useful for tenants) |
| Other personal property, including money | $7,500 for head of family, $3,750 for single w/out dependents |
| Vehicle | $10,000 (N.D.C.C. 28-22-03.1) |
| Tools of trade | $10,000 (N.D.C.C. 28-22-03.1) |
| Crops/grain raised on up to 160 acres used as your home | Absolute (N.D.C.C. 28-22-02(8)) |
| Retirement accounts | $200,000 per account up to $400,000 aggregate (N.D.C.C. 28-22-03.1) |
| LLC or partnership property | Entitled to one set of exemptions |
$10,000 doesn’t buy much farming or oilfield equipment, and you only have 10 days after receiving notice of levy to claim exemptions by filing a sworn schedule, or you lose them.
Is my merchant cash advance usurious in North Dakota?
Probably not unless you’re a sole proprietor borrowing $35,000 or less. N.D.C.C. 47-14-09 caps loan rates at the six-month US treasury bill average plus 5.5%, but no less than 7%, except loans to corporations, LLCs, co-ops, trusts, partnerships that file returns, and loans over $35,000. A sole proprietor can argue usury only by proving the advance is a loan. The penalty is forfeiture of all interest plus an additional 25% of the principal. Note that most MCAs are governed by New York law, so if a provider is arguing North Dakota usury for an LLC it likely hasn’t read the statute.
Frequently Asked Questions
Can a funder garnish (freeze) my business bank account prior to judgment?
No. North Dakota only allows garnishment after judgment under N.D.C.C. 32-09.1-02. However, once they file their judgment and ten days have passed barring execution, they can serve a garnishee summons against your operating account.
What if I’m not a resident during the winter months?
If you’re a nonresident or leaving the state, then under N.D.C.C. 28-22-15 the only exemptions you can claim are the absolute exemptions. This means you cannot claim the $7,500 or $3,750 in personal property or any of the other alternative exemptions.
How long do North Dakota judgments last?
For judgments docketed after August 1, 2021, judgment liens on non-homestead real property last for twenty years under N.D.C.C. 28-20-13, and judgments can be executed on for twenty years under N.D.C.C. 28-21-01. Judgments will continue to accrue interest during that time under N.D.C.C. 28-20-34.
Can an MCA funder use a confession of judgment against me in North Dakota?
They can’t use New York confessions of judgment against you anymore because of the 2019 amendment to CPLR 3218, but they can obtain a confession of judgment in North Dakota under Rule 68(c) if they get you to sign a verified statement which the court will review before issuing judgment. North Dakota courts have long required strict compliance with the rule.