If a court, court clerk, sheriff’s office, or arbitrator is involved, you need a lawyer. You also need a lawyer if your leverage against the funder is a legal defense like usury. If you are simply behind on payments, with no lawsuit, no entered judgment, and no frozen bank account, a merchant cash advance debt settlement company can help you.
Why does the choice depend on whether a court is involved?
Your business cannot represent itself in court. In New York, outside the small claims parts, “a corporation or voluntary association shall appear by attorney.” CPLR 321(a). See also Rowland v. California Men’s Colony (holding that corporations and other artificial entities may only appear in federal court through licensed attorneys).
In 2020, the Supreme Court of Ohio ruled that a company negotiating business debt was engaging in the unauthorized practice of law, but only because it went beyond acting as a messenger. The company was fined $1,000. The ruling only binds Ohio, but other states would likely draw the same line.
When do I need a lawyer and when can I work with a merchant cash advance debt settlement company?
Find your situation below:
| Situation | Who can help | How long do I have to act? |
|---|
| I’ve been served with a lawsuit. | Lawyer | NY: 20 days, or 30 after substituted service; PA: 20 days |
| I signed a confession of judgment, but it hasn’t been filed. | Settlement company, after a lawyer checks whether it can be filed. | NY: can be filed for 3 years after signing |
| A confession of judgment has been filed in Pennsylvania. | Lawyer | 30 days after notice to petition to strike/open |
| My bank account has been frozen. | Lawyer (a release may also be negotiated). | NY: a restraining notice expires after 1 year; a levy is void after 90 days. |
| The funder started arbitration, or an award was issued. | Lawyer. | NY: 90 days to move to vacate. |
| I’ve been sued personally based on a personal guarantee. | Your own lawyer, not your business’s. | Same as any lawsuit. |
| The funder is sending notices to my customers. | Settlement company (to negotiate); Lawyer (to fight). | N/A |
| I’m behind, and the funder filed a UCC-1, but hasn’t sued. | Settlement company. | N/A |
Can a merchant cash advance debt settlement company answer a lawsuit?
No. In New York, you have 20 days after being served to answer, or 30 days after substituted service or service through the Secretary of State. See CPLR 320(a). In Pennsylvania, you have 20 days. See Rule 1026. A settlement company can negotiate with the funder’s lawyer, but unless you file an appearance or get an extension in writing, the time to answer keeps running, and you risk a default judgment against your business.
If one funder has sued you but the others haven’t, you likely need both a lawyer and a settlement company.
Do I need a lawyer if I signed a confession of judgment?
Yes. New York still allows confessed judgments, but one can only be filed in the county where your business resides, which is any county where you have a place of business. See CPLR 3218. So, if your business is in Philadelphia with no place of business in New York, the judgment should not be filed in New York.
Once the judgment is entered, New York courts generally require a separate lawsuit to vacate it. In Pennsylvania, you have 30 days from notice of the judgment to petition to strike or open it under Pa. R.C.P. 2959. If the funder executed before notifying you, a petition under Pa. R.C.P. 2958.3 gets you a hearing within 3 business days, with execution stayed until then. If you settle but leave the confession of judgment in place, they can still use it, so it’s important to know what your lawyer will be adding to the settlement agreement.
When can you use a settlement company to settle MCA debt?
If you are behind on one or more advances but the funder has not sued you, entered a confessed judgment, restrained your account, or arbitrated you, you can usually use a settlement company. Most funders will file a UCC-1, a public notice that does not require a lawyer.
If the funder has sent notice to your customers, which they can do by an authenticated transmission pursuant to UCC 9-406, a settlement company can usually negotiate its withdrawal, but you will want a lawyer to contest it.
Ask any settlement company for its written plan if the funder sues you in 30 days. Also, get a results-based fee arrangement in writing. The Federal Trade Commission’s advance-fee ban for debt settlement companies may not apply to B2B calls pursuant to 16 C.F.R. 310.6(b)(7). Also see whether to talk to your funder or a settlement company first and settlement company vs. law firm vs. doing it yourself.
When else do you need a lawyer to settle MCA debt?
You need a lawyer to weigh bankruptcy. The debt limit for subchapter V is now $3,424,000 because the $7.5 million limit expired on 6/21/2024. You need a lawyer if you want to consider a usury defense. In Feb 2026, a New York appellate court affirmed a decision that Richmond Capital’s advances were usurious loans. If the company says it has network attorneys, ask for the lawyer’s name and an engagement letter making your business the lawyer’s client for litigation.
Frequently Asked Questions
Can you use a debt settlement company to unfreeze a frozen bank account?
They can usually negotiate a release letter from the funder’s attorney, often the fastest way to unfreeze an account. If the funder won’t sign a release, you’ll need a lawyer to ask a judge to limit enforcement, which can be done pursuant to CPLR 5240 even without the funder’s consent.
What do you do if you get an arbitration award from an unknown forum?
An arbitration award is treated like a lawsuit, and you must go to court to confirm or vacate an award. You have 90 days from delivery of the award to move to vacate in New York under CPLR 7511. In June 2026, the NY Attorney General filed suit against Rapid Ruling, alleging that 97% of the roughly 3,000 arbitrations they handled in their first three years had no appearance by the small business.
If my company settles, am I off the hook on my personal guarantee?
Not necessarily. You and your company are two different people, so your interests may diverge. Have your lawyer review the settlement to see if it covers you.
Is communication with a debt settlement company covered by attorney-client privilege?
No. The statute in New York only provides privilege for communication with an attorney or an attorney’s employee. See CPLR 4503.