Can an MCA Funder Garnish My Wages?
Only after a court judgment, and only against someone personally liable, such as an owner who signed a personal guarantee that a court enforces. Wage garnishment is a court process with federal and state limits, and a funder can't take your paycheck just because a payment was missed.
What has to happen before wages get garnished?
A funder first has to win a judgment. That usually means suing the business and, if a guarantee is involved, the guarantor. If the court enters a judgment against you personally, the funder can then use collection tools the state allows, which can include garnishing wages you earn from an employer.
What federal limits apply?
Title III of the Consumer Credit Protection Act limits how much of an individual's disposable earnings can be garnished for most debts. The U.S. Department of Labor explains the limits. States can set stricter limits, and some protect more of your pay.
How does garnishment work when you pay yourself?
Many owners don't draw a traditional wage from their own business. Garnishment rules focus on earnings paid by an employer. Other collection tools, like bank levies, are more common against business owners.
What should you do if you're sued?
Don't ignore it. Deadlines to respond are short. Talk to a business attorney quickly. A default judgment, entered because no one responded, is much harder to undo.
How do you avoid garnishment altogether?
Most garnishment starts with a default that an early call would have fixed. If you're struggling, contact the funder early about a reconciliation, modification or settlement.
Is this legal advice?
This is general information, not legal advice. Garnishment rules differ significantly by state.
Which records should you keep?
If a dispute heads toward court, your contract, statements and communications are your best evidence.
Is a bank levy different from garnishment?
For business owners, a bank levy is often the bigger worry. After a judgment, a creditor can ask the court to freeze and take money from bank accounts belonging to the person or business the judgment is against. Some funds, like certain benefits, are protected by law. The rules differ by state, and an attorney can tell you what applies to you.
How does a personal guarantee create liability?
Whether you're personally on the hook depends on the guarantee's terms and on what the court decides. A guarantee limited to performance promises is different from an unlimited guarantee of payment. Read yours, and if a suit is filed, have an attorney read it too.
How do you respond to court papers?
If you're served, note the deadline and gather your contract, statements and all correspondence. Those documents shape everything that follows.
Where does bankruptcy fit?
Owners facing several judgments sometimes ask about bankruptcy. It's a major legal step with long term effects, and it's only something to consider with a bankruptcy attorney's advice.
How can Afterfirst help with this?
Call 877-FUND-654 if you're behind on an advance and worried about where it leads. We'll help you understand your options before it reaches court.
What else do owners ask about this?
- Can an MCA company sue me?
- What should I do if I get a demand letter from an MCA funder?
- What should I do if I think I was scammed by an MCA broker?
More short answers on this topic are on the legal questions FAQ, and the MCA payment calculator runs the numbers for your own file.
Where do these facts come from?
Have a question we didn't answer?
Ask us on the call. 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.