Can MCA Lenders Take Your Personal Assets?
Yes, if you signed a personal guarantee, and you almost certainly did. The guarantee makes you personally liable for the full advance amount. The funder can pursue personal bank accounts, real estate, vehicles, investments, and other property. However, they cannot do this unilaterally. They must first obtain a court judgment against you personally through a lawsuit or confession of judgment.
How the Process Works
Step one: the funder obtains a personal judgment. Step two: they identify your assets through post-judgment discovery including bank subpoenas, property searches, and asset investigations. Step three: they levy accounts, lien real property, or seize non-exempt property. This process takes weeks to months, which your attorney can use to negotiate, challenge the judgment, or protect exempt assets.
What Is Protected
Every state has exemption laws protecting certain personal property. Common exemptions include home equity through the homestead exemption, retirement accounts including 401k and IRA, Social Security and disability benefits, necessary clothing and household goods, and tools of your trade up to a specified value. Specific exemptions and dollar limits vary significantly by state.
Strategies to Limit Personal Exposure
Challenge the personal guarantee through legal defenses if possible. Negotiate a release as part of any settlement. If a judgment exists, file exemption claims promptly and completely for all protected assets. Consider personal bankruptcy if total liability exceeds what you can pay. Most importantly, act early. The more time your attorney has before enforcement begins, the more options available to protect what you own.