When your business is facing a merchant cash advance lawsuit, time is of the essence. These legal battles can put your company’s operations, business assets, and the business’s future income, and even its survival, at risk. At Colonna Cohen, we provide tailored litigation strategies to protect business owners like you from predatory financial tactics. Our litigation team is experienced in defending MCA-related cases and can help guide you through every stage of the lawsuit process.
But how long does it take to resolve a merchant cash advance (MCA) lawsuit? The answer varies depending on multiple factors. In this post, we break down what to expect and how to prepare for the road ahead.
Realistic Expectations: How Long Will It Take?
Understanding how long it takes to resolve a merchant cash advance lawsuit is essential for business owners navigating legal and financial uncertainty. The duration of your case will depend on numerous variables such as the complexity of the dispute, the jurisdiction, the behavior of the parties, and whether settlement is an option.
Fast Settlement (2 to 3 Months)
If both parties are motivated to resolve the dispute quickly, a settlement may occur within the first few weeks or months. This is especially likely when the MCA debt or amount owed is relatively small, the contractual terms are not heavily contested, or there’s a strong legal argument that encourages the merchant cash advance lender to avoid trial. Early settlements often result from pre-litigation negotiations or mediation.
Moderate Litigation (6 to 12 Months)
Most MCA lawsuits fall into this category. After the initial complaint, response, and discovery phase, both parties gain a clearer understanding of the facts and legal claims. Settlement is still common during or after discovery, especially if motions (like a motion for summary judgment) clarify the strengths or weaknesses of each side’s position. At this stage, your attorney’s litigation strategy is crucial—early identification of procedural errors, potentially usurious loans, or deceptive contract terms can lead to favorable resolutions.
Complex Trial (12 to 24+ Months)
Cases that involve heavily disputed facts, merchant cash advance debt, multiple creditors, large sums, or novel legal issues can take more than a year to resolve. Trials require a full exchange of evidence, depositions, expert witness testimony, pre-trial motions, and potentially appeals. These cases often feature disputes over whether such merchant cash advance agreements are deemed potentially usurious loans or whether the business knowingly entered a predatory contract. If a trial is necessary, your legal team must be prepared for extensive preparation and courtroom advocacy.
Appeals and Post-Judgment Motions
Even after a verdict, either party may file motions for reconsideration or appeal the outcome, further extending the timeline. Legitimate merchant cash advances appeals can add another 6 to 18 months, depending on the court’s backlog and the complexity of the legal questions involved.
Factors That Influence the Timeline of an MCA Lawsuit
The merchant cash advance lawsuit timeline can vary widely based on a variety of legal, procedural, and strategic factors. Understanding each of these components in depth can help businesses anticipate challenges and make informed decisions:
- Complexity of the Contract: Merchant cash advance contracts are often written with intentionally complex and opaque language. They may contain terms that blur the line between disguised usurious loans and sale of future receivables, include high daily repayment schedules, and embed clauses waiving certain legal rights/personal assets. Disputing these provisions requires careful legal analysis and often prolonged litigation, especially if courts must interpret ambiguous terms.
- Jurisdiction and Venue: Where the lawsuit is filed plays a significant role in determining its duration. Some jurisdictions, like New York or Delaware, have commercial divisions designed for business disputes, which may expedite resolution. Others may lack such infrastructure, resulting in slower processing times. In addition, parties may dispute whether the venue is proper—especially if the contract includes a forum selection clause—which adds time and complexity.
- Opposition Strategy and Conduct: The MCA company’s approach to litigation can directly affect the speed of the case. Creditors may employ aggressive strategies such as seeking default judgments, filing motions early to intimidate, or prolonging the discovery process. Alternatively, they may drag their feet in responding to requests or fail to provide necessary documents, delaying the overall progress.
- Quality and Timing of Your Legal Response: The speed and strength of your defense matter. Filing a prompt and well-argued response to the initial complaint, raising valid affirmative defenses, and potentially countersuing for usury or deceptive practices can both strengthen your case and influence the timeline. Lawyers with experience in MCA litigation can often spot procedural errors or contractual vulnerabilities early on that help move the process forward more efficiently.
- Willingness to Negotiate or Settle: If either party is open to alternative dispute resolution (ADR) methods such as mediation or arbitration, the lawsuit may conclude much faster. Many cases are resolved through negotiated settlements during discovery or even before formal litigation begins. However, if the creditor insists on full repayment or refuses to compromise, the case may proceed to trial, extending the timeline.
- Existence of Multiple Creditors or Claims: If the business is involved in multiple MCA agreements or has overlapping claims with other lenders, consolidating or coordinating those lawsuits can complicate and lengthen the proceedings.
Being aware of these influencing factors empowers businesses to prepare strategically and choose counsel equipped to reduce delays and achieve the best possible outcome.
Settlement and Negotiation Timelines
How long does an MCA lawsuit take if both parties pursue a settlement? In some cases, businesses can resolve claims in as little as 60-90 days.
Settlement speed depends on:
- Your debt load and payment history
- The enforceability of the MCA contract
- The strength of your legal defenses
- How quickly both sides can provide documentation
Some business owners opt for pre-suit negotiation or arbitration as part of MCA contract dispute resolution, which can speed up resolution significantly.
Typical Stages in the MCA Lawsuit Process
Understanding the steps in a merchant cash advance lawsuit is essential for managing expectations and preparing a robust defense. Each stage introduces different legal and strategic considerations that impact how the case unfolds.
Service of Complaint
The MCA lawsuit officially begins when the merchant cash advance provider files a complaint and serves the business owner. This document outlines the allegations and initiates the legal process. The timing and method of service may vary by jurisdiction, but it starts the countdown for your legal response. If improperly served, this issue may be grounds for challenging the lawsuit’s validity.
Response Filing
After being served, the defendant has a limited window—typically 20 to 30 days—to file an official response. This is where your attorney can raise legal defenses such as usury, unconscionability, or improper venue. Failure to respond within the deadline can lead to a default judgment, which is why timely legal representation is critical.
Discovery Phase
Once the response is filed, the discovery process begins. Both parties exchange key documents such as the original merchant cash advance transactions agreement, payment records, business bank account statements, and correspondence. Depositions may also be conducted to clarify facts or challenge the opposing side’s version of events. Discovery can take weeks or months, depending on the complexity of the case and the volume of material involved.
Motion Practice
During or after discovery, parties may file pre-trial motions. These include motions to dismiss for legal insufficiency or motions for summary judgment if there is no dispute over material facts. Successful motions can expedite resolution or significantly narrow the scope of the trial. However, filing or defending against these motions adds both time and legal expense.
Settlement Negotiations
Many merchant cash advance lawsuits resolve before going to trial. Settlement discussions can occur at any stage of the process, but are most common after discovery, when both sides better understand the strengths and weaknesses of their positions. A favorable settlement can save time, money, and uncertainty.
Trial
If the case does not settle, it proceeds to trial. Depending on the jurisdiction, this may be a bench trial (judge only) or a jury trial. Trials involve opening statements, witness testimony, cross-examination, and closing arguments. A verdict is then issued, which may be followed by appeals. The trial phase can extend the timeline by several months or even years in complex cases.
Common Delays in Merchant Cash Advance Litigation
Although merchant cash advance lawsuits often resolve within 6 to 12 months, several factors can delay the litigation process. Understanding these delays can help you proactively mitigate their impact and plan strategically.
Overloaded Court Dockets
Post-COVID, many state and federal courts are experiencing backlogs due to prior case suspensions, staff shortages, and surging caseloads. In high-volume jurisdictions like New York, Florida, and California, your MCA case may take longer to schedule hearings, file motions, or receive a final judgment. Some courts prioritize criminal and family law cases over commercial litigation, pushing civil disputes further down the queue.
Incomplete or Disorganized Documentation
Merchant cash advance cases rely heavily on detailed financial documentation, including the original MCA agreement, repayment records, bank statements, and communication logs. Delays arise when either party struggles to provide complete or legible records. If documents are missing, conflicting, or poorly organized, the discovery phase can extend by weeks or months as parties request clarifications or file motions to compel production.
Use of Expert Witnesses
When financial data, interest rates, or industry practices are at issue, expert witnesses may be called to analyze or testify. The need for these professionals introduces scheduling complexities, as experts must review voluminous records, prepare reports, and coordinate with legal counsel. Moreover, disputes over expert qualifications or testimony admissibility can prolong pre-trial motions and hearings.
Aggressive or Obstructionist Litigation Tactics
Some MCA creditors employ tactics specifically designed to create delays, manipulate legal leverage, and wear down defendants. These may include excessive motion filings, last-minute requests for continuances, refusal to engage in settlement discussions, or delaying responses during discovery. In extreme cases, these actions may be grounds for sanctions, but they often succeed in slowing the process unless effectively countered by experienced counsel.
Multi-Party or Parallel Litigation
In situations where a business has multiple MCA lenders or overlapping debt litigation, coordinating cases across different courts or jurisdictions can introduce logistical delays. Each case may have its timetable, requirements, and judges, making synchronized resolution challenging without a unified legal strategy.
Inadequate Legal Representation
Finally, delays often stem from underprepared or overburdened defense attorneys who fail to meet deadlines, miss court appearances, or inadequately challenge creditor actions. Choosing a firm experienced in MCA litigation ensures proactive case management and timely responses, reducing the risk of procedural holdups.
Being aware of these common delays allows business owners to plan accordingly and take steps to reduce uncertainty. Hiring experienced counsel early in the process is one of the most effective ways to stay ahead of avoidable setbacks.
How Does an Extended MCA Lawsuit Affect Your Business
Legal action involving merchant cash advance (MCA) providers can drag on for over a year, especially if it escalates to trial. During that time, an extended MCA lawsuit can place severe stress on every aspect of your operation. For sellers dealing with multiple MCA agreements or contracts, the pressure is multiplied. Understanding the business-wide effects is crucial to preserving valuable leverage and navigating the litigation successfully.
Cash Flow Disruption
Perhaps the most immediate and damaging consequence is disruption to the seller’s business income. Most MCA providers impose daily or weekly repayment structures that can severely restrict liquidity. If the lawsuit results in aggressive collection tactics such as bank account freezes, receivables garnishment, or property liens, the business may lose access to working capital altogether. This forces many owners into difficult decisions about how to cover payroll, purchase inventory, or fulfill customer orders.
Operational Instability
An ongoing lawsuit drains time and focus from core business functions. Leadership must divert attention to responding to motions, compiling financial documents, and attending depositions. For businesses entangled in many MCA contracts, managing overlapping litigation becomes an operational burden in itself. The distraction not only affects current performance but may also delay or derail growth initiatives.
Legal Costs and Administrative Burden
Long-running MCA lawsuits come with mounting legal costs. Fees for attorneys, expert witnesses, court filings, and forensic accounting can quickly erode already-limited resources. Companies facing legal action from more than one MCA provider may also incur duplicative costs across parallel proceedings. Internally, administrative staff are tasked with constant document retrieval, email management, and coordination with legal counsel, all of which reduce productivity.
Reputational Damage
A prolonged MCA lawsuit can damage a company’s standing with lenders, customers, and vendors. Public records of lawsuits can lead to loss of credit, withdrawal of partnerships, or scrutiny from regulatory bodies. For sellers with many MCA agreements on record, this reputational impact can compound, making it difficult to re-establish trust even after the legal action is resolved.
Emotional and Cultural Fallout
Extended litigation often produces a high emotional toll on owners and employees. The stress of mounting debt, public legal battles, and fear of business closure can create anxiety and low morale among staff. In smaller businesses, the owner’s emotional state may directly influence employee retention and engagement, compounding instability.
Strategic Setbacks and Loss of Leverage
When litigation drags on, businesses often delay capital expenditures, freeze hiring, and put off expansion plans. In the rush to escape the lawsuit, some business owners may consider surrendering valuable leverage, like pursuing a premature or unfair settlement. Yet doing so can result in lasting financial harm. MCA providers may push for unfavorable terms, especially when they sense urgency or distress.
To avoid these pitfalls, business owners should approach MCA litigation as a high-stakes financial and legal strategy. With the help of an experienced attorney, it’s possible to assert defenses, challenge the validity of MCA contracts, and protect your position without surrendering leverage unnecessarily.
When to Seek Legal Representation
If you’ve been served with a summons or suspect that you’re in breach of an MCA payment agreement, don’t delay. The earlier you consult with an attorney, the more options you’ll have for resolution.
An experienced attorney can:
- Explain how to respond to an MCA summons
- Review the validity of the MCA contract
- Identify legal defenses against merchant cash advance companies
- Pursue dismissal, reduction, or settlement of the claim
Our team at Colonna Cohen is ready to review your case and chart a path forward.
Final Thoughts
Facing a merchant cash advance lawsuit is stressful, but the process doesn’t have to drag on indefinitely. Understanding the timeline, preparing for each stage, and working with experienced legal counsel can help you resolve the case efficiently and protect your business.
Need Help Now? If your business has been served or is under threat, don’t wait. Contact Colonna Cohen today for a confidential consultation.