Statute of Limitations: Meaning in a Merchant Cash Advance
A statute of limitations is the deadline for filing a lawsuit. After it passes, a claim generally can't be brought in court. The time limit for contract claims differs by state and by the type of contract.
What does statute of limitations mean?
Every legal claim has a clock. For breach of a written contract, many states set a period of several years, starting from the breach. If a funder waits too long, a court can dismiss the case. The same applies to claims you bring against a funder.
Why does statute of limitations matter to your business?
It rarely matters while an advance is active. It becomes relevant with old disputes. The governing law clause in your contract can affect which state's time limit applies. Some actions, like a payment or a written acknowledgment, can restart or extend the clock in certain states.
Why not rely on it?
Deciding when a claim expires is technical. Talk to an attorney before assuming an old debt can't be pursued.
Do judgments last longer?
Once a court enters a judgment, a separate, usually longer, enforcement period applies.
What is tolling?
In some situations, the clock pauses, which lawyers call tolling. Bankruptcy filings, agreements between the parties and certain other events can toll the period. Whether that happened in your case is a legal question, and it's one more reason to get professional advice before assuming a claim has expired.
Why keep your records?
Old contracts, statements and letters help an attorney pin down the dates that matter.
Where will you see it?
In state statutes, in court decisions and in defenses raised in collection lawsuits.
Is this legal advice?
This is general information, not legal advice.
Which terms are related to statute of limitations?
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.