Can an MCA Funder Freeze My Bank Account?
Usually not on its own. A funder needs a court judgment, or in some states a confessed judgment, before it can ask a bank to freeze or levy your account. Before that, it can debit only what your contract authorizes. If an account is frozen, the funder has already gone to court, so call a lawyer that day and read the papers the bank sends you.
What has to happen before a funder can freeze an account?
- You default under the contract, or the funder says you did.
- The funder sues and wins, or files a confession of judgment where that's still allowed.
- With a judgment, the funder asks the court or a sheriff to serve a levy or restraining notice on your bank.
- The bank freezes funds up to the judgment amount.
Some states have closed the shortcut. California courts won't enter a confessed judgment, and Texas and Virginia make confession clauses in these contracts void or unenforceable.
Is the daily debit the same as a freeze?
The debit you authorized can keep running until you and the funder change it. Blocking it on your own is usually a default, which is the first step in the list above. See what happens after a default.
What should you do if your account is frozen today?
- Call your bank and ask who served the freeze, the court and case number, and the amount held.
- Ask the funder for the judgment papers and the balance it claims.
- Open a separate account for new sales only if your lawyer agrees, since moving deposits can count as a new default.
- Call a lawyer the same day. Some freezes can be challenged quickly, and deadlines are short.
Payroll and rent are usually the first worry. Tell your lawyer which payments are due this week so they can ask for the right relief.
What papers will the bank send you?
The bank sends a notice that names the creditor, the court or agency behind the order, and the amount it is holding. Keep that notice. Your lawyer needs the case number and the creditor's name on it to respond, and it tells you which funder went to court.
What should you ask the funder?
- What would count as a default under my contract?
- Is there a confession of judgment in this deal?
- If sales drop, how do I request reconciliation instead?
- Who do I call before anything goes to court?
Where can you check your own numbers?
The short version is in the Legal FAQ. To check the numbers on your own advance, use the MCA payment calculator.
Want a second look at your advance?
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.