MCA Defense in California

California's current confession-of-judgment rule

California Code of Civil Procedure §1132 states that a judgment by confession is unenforceable and may not be entered in superior court. The section expressly excludes judgments obtained or entered before January 1, 2023. Counsel should check the judgment date and the kind of proceeding instead of applying this rule to every debt dispute.

Source checked October 2, 2026. This summary is general information, not an attorney opinion on your contract.

Check the dates and the type of court document

Gather the agreement, any confession documents, and the complete court record supplied to you. Note whether you have received a demand, a summons and complaint, or notice of an existing judgment. An owner should not ignore ordinary lawsuit papers because a different enforcement mechanism is restricted.

For an older judgment or a proceeding originating elsewhere, ask counsel which rules apply to recognition or enforcement. A California address and an MCA label do not replace review of the actual documents.

Review the commercial financing disclosures

California's Department of Financial Protection and Innovation publishes information on commercial financing disclosures. Preserve the disclosure presented with your offer, along with the signed agreement and funding record. Ask a qualified adviser whether the transaction and provider fall within the applicable rules.

For a practical cost review, compare net funds received, the total amount to be collected, payment frequency, fees, and any reconciliation or prepayment provisions. Do not treat a factor rate as interchangeable with an annual percentage rate. The DFPI reference below provides the regulatory background.

Prepare a workable response

Make one list of legal deadlines and another of operating obligations. The first belongs in the attorney's review; the second should include payroll, rent, essential suppliers, taxes, and creditor withdrawals. A workable proposal needs to reflect both, without assuming a creditor discussion pauses a court matter.

Ask counsel to explain who is represented, whether an owner is named personally, and what work is included in the engagement. Ask the financial consultant to explain the payment proposal, total fees, and the consequences if one creditor declines. Keep accepted terms in writing.

Documents to gather before a review

• Signed MCA agreements, amendments, guarantees, and reconciliation provisions.
• Payment history, bank statements, and the creditor's claimed balance.
• All court papers, service records, case numbers, and response dates.
• Bank restraint notices and correspondence about settlement or modification.

Questions to put to the people handling your file

Confirm who is responsible for each deadline, whether counsel represents the entity or an owner as well, and how legal fees are billed. Ask for the consulting scope and creditor proposal separately. No projected discount or payment reduction is an accepted agreement until the relevant parties document it.

BDI can help organize the financial information for an initial review. Availability, legal scope, and representation must be confirmed with the attorney. We do not promise a particular court result, account release date, or savings percentage.