7 Personal Assets at Risk When an MCA Has a Personal Guarantee

When you signed that MCA agreement, you probably signed a personal guarantee too. Most people don’t read it. They skim, they sign, they wire the money into the business account, and they move on. But that one paragraph is the reason your house, your car, and your savings account are now on the table.

Short answer: A personal guarantee on an MCA means the funder can come after you personally when the business defaults. Not the business, you. Your home, your bank accounts, your car, your wages, your investment accounts, your spouse’s joint assets, and in some cases, your retirement — all of it is in play. MCA funders are not traditional lenders, they move faster, and they play rougher. If you signed a PG and you’re behind on payments, you need to understand what’s actually exposed before the funder files a confession of judgment and freezes everything in 48 hours.

Here’s what’s at risk.

1. Your home

Your house is usually the biggest asset a personal guarantor has, and funders know it. Once a judgment is entered against you personally, the funder can record a judgment lien against any real property in your name. This doesn’t force a sale immediately, but it attaches. When you go to sell, refinance, or pull equity — the lien gets paid first. In states that allow it, and many do, the funder can move to actually foreclose on the lien and force a sale. Homestead exemptions exist in some states, but they’re not what most people think they are. In New York, the homestead exemption is capped, and it’s well below the value of most homes on Long Island. If your house has equity, the equity above the exemption is exposed.

2. Personal bank accounts

This is the one that happens fastest. If the MCA lender has a confession of judgment (and most NY MCA agreements did, until the law changed — and many still do through workarounds), they can walk into court, get a judgment entered the same day, and serve restraining notices on every bank they think you use. Your personal checking, your personal savings, joint accounts with your spouse — all frozen. You find out when your debit card gets declined at the grocery store. No warning. No call. By the time your lawyer files to contest it, two weeks of your life have already been burned.

3. Your car

If you own your car outright, it’s a judgment asset. The sheriff can levy on it. In practice, funders don’t usually chase cars first because the resale value isn’t worth the hassle, but it’s available to them, and if you have a second car, a boat, a motorcycle, anything titled in your name with equity — it’s on the list. If the car is leased or financed, there’s nothing for them to take, the lienholder is ahead of them.

4. Wages and personal income

Wage garnishment is available in most states after judgment, and the MCA funder can garnish up to 10% of gross wages in New York, more in other states. If you draw a salary from the business, they can garnish that. If you take a W-2 job somewhere else to keep the lights on while you sort this out — they can garnish that too. The judgment follows you to the new employer. Some guarantors think switching jobs protects them. It doesn’t, the funder just files a new garnishment at the new payroll.

5. Investment and brokerage accounts

Your E*TRADE, your Fidelity, your Schwab — all reachable. A restraining notice hits the brokerage the same way it hits a bank. Positions get frozen, you can’t sell, you can’t transfer, you can’t rebalance. If you were holding a small-cap position that needed to be exited, too bad. The account sits locked while the funder gets paid out of it. Retirement accounts (401k, IRA) have ERISA protections in most cases, but not all, and not in every state, and not if the funder can argue you commingled funds. Don’t assume your retirement is safe just because someone told you it is.

6. Your spouse’s assets, if they’re joint

This one catches people off guard. If your bank account is joint with your spouse, the whole account is frozen, not your half. Same with a jointly-titled car, a jointly-titled house, a joint brokerage. Your spouse didn’t sign the PG, but the funder doesn’t have to unwind the joint ownership to freeze the account. They freeze it, your spouse has to go to court to claim their portion, and in the meantime the bills don’t get paid. If you’re going through a divorce and assets are still joint, this gets even worse — ask me how I know.

7. Future money you don’t have yet

A judgment in New York is good for 20 years, and it’s renewable. Think about what that means. The funder doesn’t have to collect today. They can sit on the judgment, wait for you to rebuild, wait for you to sell a business in 8 years, wait for an inheritance, wait for a tax refund, wait for a settlement from an unrelated lawsuit — and then attach it. Every time you touch the banking system for the next two decades, the judgment is there. You can’t buy a house with a mortgage without it showing up. You can’t open certain business accounts without it showing up. The exposure doesn’t end when the business dies, it follows the guarantor.

What to do if you signed a PG and you’re behind

Don’t wait for the default to mature. The window between “falling behind” and “frozen accounts” is shorter than you think, sometimes 72 hours, sometimes less. Move personal cash out of accounts the funder knows about before a restraining notice hits — not to hide it (that’s fraudulent conveyance and it’s a separate problem), but to have operating cash while you negotiate. Talk to a lawyer who actually does MCA work, not a general commercial litigator, there’s a difference. And understand that settlement is almost always available, funders would rather take 40 cents on the dollar today than chase you for 20 years. But you only get the good settlement if you move before the judgment is entered, not after.