Can an MCA Funder Take Your Car, Truck, or Equipment: Secured and Unsecured Rights Explained

The funder’s rights against a vehicle or machine depend on documents signed before the dispute began. A secured party with a valid interest and a judgment creditor with a levy hold different powers, and an MCA funder with neither holds none at all.

Rain on the windshield changes no lien, though it changes the mood in which the owner reads the default notice. The distinction that follows decides which assets answer.

Two Powers, Two Sources

The agreement comes before the asset. A funder repossesses as a secured party after default, or levies as a judgment creditor after judgment, and confusion between the two roles produces most of the errors this article corrects. The confusion is extremely common and extremely costly.

One machine sits in the lot. Two separate bodies of law govern who may drive it away.

The owner should confirm and record which role the funder claims before discussing any surrender. What the owner surrenders, or refuses to surrender, before counsel advises sets the tone for the rest. The answer shapes the rest of the analysis.

The Secured Funder’s Reach

Collateral first, procedure second. After default, New York rules for possession after default permit a secured party to take possession of the collateral through judicial process or without it where no breach of the peace occurs. The section permits the party to render equipment unusable without removal and to require the debtor to assemble the collateral at a reasonably convenient place.

A sale of the machine does not wash the lien away. New York law on disposition of collateral continues the interest despite sale or other disposition unless the secured party authorized disposition free of the interest, and the interest attaches to identifiable proceeds, which may mean the cash the buyer paid. The buyer who relied on a bill of sale learns the filing system the expensive way.

The filing proves only the claimed lien. Three figures decide the rest: the balance owed under the documents, the value of the machine, and the priority of any purchase money lender ahead of the funder. Most funders quote the first figure as if the other two did not exist. This is the arithmetic the settlement must correct.

How far a blanket description of all business assets extends into later purchases is a question worth leaving to counsel. Simply place the description, the filing, and the purchase records before counsel in one stack.

The Unsecured Funder’s Path

Without a security interest, the funder needs a judgment and a levy. New York levy rules for personal property direct the sheriff to levy on property capable of delivery by taking it into custody, without interfering with the lawful possession of pledgees and lessees. Property beyond physical reach, with debts owed to the debtor, is reached by service of the execution on the garnishee. The creditor names property in order to shift the burden of objection onto the owner.

A levy by service lasts ninety days before going void except as to property transferred or proceedings commenced, and the creditor who names another person’s property in the notice answers in damages for the error (ninety days is shorter than most creditors admit).

Exemptions narrow the levy further. New York personal property exemptions protect one motor vehicle up to a modest value above liens, with a higher figure where the vehicle is equipped for a disabled debtor, and tools of trade necessary to the debtor’s calling up to a smaller figure. The figures move with amendment, and counsel should confirm the current amounts before advising on any seizure.

The sheriff takes custody. The funder does not.

On no account should the owner surrender the truck at the curb to a voice on the telephone. Surrender follows identification of the claimed right, and identification belongs to counsel.

Title, Liens, and the Truck With Two Claims

Match and record the title, the purchase money loan, and any MCA filing against the same vehicle. The purchase money lender stands ahead of later lien claims against the equity. The certificate of title rules of the governing state add a layer this article does not survey.

A leased truck and a floor plan unit belong to their title holders, not to the borrower fleet. The faded registration sticker proves nothing about the lien order.

Resist the urge to move the truck beyond reach before counsel advises.

A Review of the Asset Position

The repossession agent may call, even briefly, before counsel is retained. An owner can bring the title, the loan statements, and the filings that cloud it to Delancey Street, a settlement company for MCA and business debt, for a commercial review, while independent counsel (not the settlement company) sorts the secured claims from the unsecured ones. The objective is to ensure no vehicle is surrendered on demand alone. Counsel should ensure any levy is tested against the exemptions.

Machines depreciate faster than disputes resolve. The truck feels like the business itself, and I understand the feeling. The owner brings the file as it stands, and the first conversation asks nothing more.