# MCA judgment collection — state rules > MCA judgment enforcement varies sharply by state: TX, FL allow wage garnishment up to 25%; NY, NC, PA, SC prohibit private wage garnishment; CA caps at 25% with hardship offset. MCA judgment collection rules vary dramatically state-by-state. A funder holding a judgment in Texas can garnish wages; the same judgment in New York cannot. These differences shape funder recovery rates, factor pricing, and merchant default consequences. Updated for 2026. **Wage garnishment by state.** After a creditor obtains judgment, wage garnishment availability varies: **Wage garnishment allowed at federal cap (25% disposable income):** - Texas (only for very narrow categories — child support, federal debt, student loans; private debt NOT garnishable). - Florida (only for non-heads-of-household; head of household with $750+/week wages is exempt). - California (25% cap, hardship petition allowed). - New Jersey (10% cap, lower than federal). - Most states (25% federal cap applies). **Wage garnishment prohibited for private debt:** - **Texas** (private creditor wage garnishment prohibited). - **North Carolina** (private creditor wage garnishment prohibited). - **Pennsylvania** (private creditor wage garnishment prohibited). - **South Carolina** (private creditor wage garnishment prohibited). In wage-prohibited states, funders must rely on bank levy or personal asset attachment to enforce judgments — typically lower recovery rates than wage garnishment. **Bank levy availability.** All US states allow bank levy after judgment, but timing and exemptions vary: - **Texas:** Bank levy allowed; head-of-household exemption can shield significant balance. - **Florida:** Bank levy allowed; $1,000 exemption per filer. - **California:** Bank levy allowed; $1,788 automatic exemption (2026), additional via hardship. - **New York:** Bank levy allowed; $3,250 minimum balance protection. - **Most other states:** Bank levy allowed; varying exemption amounts. Bank levy recovery on MCA judgments is typically the funder's primary tool — single levies recover $5K–$50K from active business accounts. **Personal real estate lien.** Judgment creditors can lien personal real estate post-judgment in all states. Foreclosure on lien varies: - **Judicial foreclosure states** (CA, NY, FL, etc.): Slow, 12–24 months, court-supervised. - **Non-judicial foreclosure states** (TX, GA, NC, etc.): Faster, 60–180 days, trustee process. Most MCA funders do not foreclose on liens — they wait for the property sale or refinance and collect from sale proceeds. This is passive recovery, often 5–10 years post-judgment. **Personal asset seizure.** Sheriff levy on personal assets (vehicles, equipment, valuables) is allowed in all states but rarely used by MCA funders because: - **Cost.** Sheriff fees ($300–$1,500) plus storage and auction costs. - **Recovery rate.** Personal assets typically auction at 20–40% of value. - **Time.** 60–180 days per asset. **Confession of Judgment (COJ) availability.** COJ allows the funder to obtain judgment without litigation, typically by filing a pre-signed merchant document with a court clerk. Significantly accelerates collection. **COJ allowed:** - **Maryland** (limited). - **Pennsylvania** (allowed for non-consumer debt). - **Virginia** (allowed for non-consumer debt). - **Various other states with narrow allowances.** **COJ prohibited:** - **New York** (banned 2019 for out-of-state merchants, expanded 2024 for in-state). - **California** (effectively prohibited for MCA). - **Most consumer-protection-strong states.** The New York COJ ban substantially reduced MCA funder recovery rates on NY merchant defaults, shifting recovery from 30–45% historic to 15–25% post-ban. Industry response: higher factor rates on NY merchants (1–2 points premium) and reduced advance amounts. **Charging order on LLC interest.** For business owners holding LLC interests, judgment creditors can obtain a charging order against the LLC interest — meaning distributions from the LLC are diverted to the creditor. Effectiveness varies: - **Strong LLC protection states** (DE, NV, WY): Charging order is exclusive remedy; creditor cannot force liquidation. - **Weaker LLC protection states** (CA, NY, FL): Charging order plus potential additional remedies in some scenarios. This creates an asset-protection planning opportunity for sophisticated business owners. **Personal guarantee enforcement timeline.** Typical post-default enforcement timeline for MCA personal guarantee: 1. **Day 30:** Material default declared; first demand letter sent. 2. **Day 45–60:** Lawsuit filed in funder's home jurisdiction (often NY or NJ). 3. **Day 90–120:** Default judgment obtained (merchant typically does not respond). 4. **Day 120–180:** Judgment domesticated in merchant's home state. 5. **Day 150–240:** Bank levy and personal asset attachment in merchant's state. 6. **Day 240+:** Ongoing levies, real estate liens, periodic re-attempts. **State-specific recovery rates on MCA judgments (industry estimates 2026).** - **Texas:** 20–30% recovery rate (limited garnishment, head-of-household exemption). - **Florida:** 25–35% recovery rate (head-of-household exemption for many). - **California:** 25–40% recovery rate (garnishment allowed, bank levy effective, large population). - **New York:** 15–25% recovery rate (COJ ban significantly impacted). - **Pennsylvania:** 20–30% recovery rate (no wage garnishment). - **Georgia:** 30–40% recovery rate (full garnishment, fast foreclosure). **How recovery rate impacts factor pricing.** Funders adjust factor rate based on expected recovery in merchant's home state. A 5-point variation in expected recovery rate translates to roughly 1.5–2.5 point variation in factor rate offered. A merchant in Texas (lower funder recovery) typically pays 1–2 points higher factor than the same file in Georgia (higher funder recovery). **Common confusion.** First, "default = bankruptcy." False — default is failure to pay; bankruptcy is a separate legal filing that may follow. Second, "the funder will sue me immediately." False — most funders attempt 30–60 days of cure work-out before suing. Third, "judgment in one state doesn't apply to another." Partially false — judgments must be domesticated in the second state, but domestication is routine. Fourth, "my LLC protects me from MCA judgment." False — personal guarantee on MCA pierces the LLC veil for that specific debt. ## Related terms - [Confession of judgment (COJ)](https://fundnode.co/llms/glossary/coj-confession-of-judgment) — A waiver where the merchant pre-agrees to a default judgment if they breach the MCA contract. Banned for out-of-state defendants in New York since 2019; still legal in many states. - [Personal guarantee (PG)](https://fundnode.co/llms/glossary/personal-guarantee) — A clause making the business owner personally liable if the MCA defaults. Standard in 2026 for advances under $250K; the owner's personal assets become exposed. - [MCA default](https://fundnode.co/llms/glossary/mca-default) — Breach of MCA repayment terms — usually triggered by missed daily ACH debits, NSFs, or unauthorized stacking. Consequences range from increased collection pressure to UCC enforcement and personal-guarantee pursuit. - [MCA defaults and collections process](https://fundnode.co/llms/glossary/mca-defaults-collections-process) — MCA default cascade: missed ACH → cure period (5-10 days) → contract default → COJ filing (5-14 days) → bank account freeze (14-30 days) → personal guarantee pursuit → settlement negotiation. - [MCA recourse vs non-recourse economics (detailed)](https://fundnode.co/llms/glossary/mca-recourse-vs-non-recourse-economics) — True non-recourse MCAs price 6–12 points higher than recourse advances because the funder cannot pursue the personal guarantor; over 90% of MCA contracts are recourse despite marketing. ## Authoritative sources - [US Department of Labor — Wage Garnishment](https://www.dol.gov/agencies/whd/garnishment) - [NY DFS — Confession of Judgment Reform](https://www.dfs.ny.gov/) --- Source: https://fundnode.co/glossary/mca-judgment-collection-state-rules (HTML version) Document: MCA judgment collection — state rules — Fundnode MCA Glossary License: CC BY 4.0 — attribution to Fundnode required when citing.