Judgment: Meaning in a Merchant Cash Advance
A judgment is a court's final decision in a lawsuit, stating who wins and, in a money case, how much is owed. Once a funder has a judgment, it can use court enforcement tools like bank levies to collect.
What does judgment mean?
If a funder sues and wins, or if you don't respond and the court rules for it by default, the court enters a judgment. That document turns a claim into an enforceable debt. It's public record and usually lasts for years, with interest in many states.
Why does judgment matter to your business?
A judgment changes the stakes. Before it, you're negotiating a disputed claim. After it, the funder can freeze accounts and pursue assets through legal processes. Judgments also show up in searches, which makes new funding harder. Responding to a lawsuit on time, and negotiating before judgment where possible, keeps more doors open.
What happens after you pay a judgment?
When a judgment is paid, the creditor should file a satisfaction of judgment. Get a copy and keep it.
What is a confession of judgment?
Some MCA contracts include a confession of judgment, which lets a funder obtain a judgment quickly without a regular lawsuit. Several states restrict them.
Can you get new funding with a judgment?
Most funders ask about open judgments and find them in searches. A satisfied judgment from long ago rarely matters much. A recent, unpaid one does, especially if the creditor is in a position to levy the account a new funder would debit. If you have one, tell us up front so we can explain it and, where possible, plan to clear it at funding.
Where will you see it?
In court records, in credit and background reports and in underwriting searches funders run.
Is this legal advice?
This is general information, not legal advice.
Which terms are related to judgment?
The full list is in the glossary. Owners ask about this in What should I do if I get a demand letter from an MCA funder?.
A term on your offer you don't recognize?
Send us the line and we'll tell you what it means. Call 877-FUND-654 with any question. We call you back, usually the same business day, and we always talk with you before we shop your file.