MCA Default and Your Business Bank Account

What an ACH Authorization Permits

An ACH authorization in an MCA agreement permits the provider to initiate electronic debits from the specified business bank account according to the terms of the agreement. The authorization typically specifies the amount, frequency, and duration of the debits. It does not give the provider ownership of the account, unrestricted control over funds, or the ability to withdraw arbitrary amounts outside the agreement’s terms.

After a default, the provider may continue to attempt ACH debits according to the agreement’s terms. If the account has insufficient funds, the debit may be missed or returned. Repeated missed or returned debits may contribute to the creditor’s assertion that a default has occurred.

What an ACH Authorization Does Not Permit

An ACH authorization does not give the creditor unrestricted access to your bank account. It does not permit the creditor to withdraw amounts outside the terms of the agreement. It does not give the creditor the ability to freeze the account, transfer funds at will, or override the account holder’s authority.

If you are concerned about repeated ACH debits, it is important to understand your contractual obligations. This site does not advise blocking authorized ACH debits as a creditor-evasion strategy. Doing so may violate contractual obligations and may not resolve the underlying situation. Instead, evaluating resolution strategies — such as restructuring, settlement, or qualified refinancing — may provide a more constructive path forward.

UCC Filings and Bank Accounts

A UCC financing statement is a public filing that provides notice of a creditor’s potential security interest in business assets. A UCC filing may reference a business bank account or accounts as part of the described collateral, depending on the security agreement.

A UCC filing does not automatically freeze a business bank account. It does not give the creditor the ability to withdraw funds from the account outside the terms of the agreement. It does not prevent the account holder from accessing or using the funds in the account. A UCC filing is a notice — it is not a court order and does not provide the remedies associated with a judgment.

Bank Account Levies: What Requires Legal Process

A bank account levy — the legal process by which a creditor may collect funds from a bank account — typically requires a judgment. The creditor must first file a lawsuit, prevail (or obtain a judgment through a confession of judgment where enforceable), and then take steps to execute the levy through the court system. The specific process depends on the jurisdiction and applicable law.

A levy does not happen automatically after a default. It requires the creditor to go through the legal process of obtaining a judgment and then executing on it. If a levy has been served on your bank account, you should consult qualified legal counsel promptly, as there may be deadlines for claiming exemptions or contesting the levy.

What May Happen to Your Bank Account After Default

After an MCA default, the following may affect your business bank account:

• ›The provider may continue to attempt ACH debits according to the agreement’s terms.
• ›If the account has insufficient funds, debits may be missed or returned, which may contribute to the creditor’s assertion of default.
• ›A UCC filing may exist that references the account or other business assets, but it does not freeze the account.
• ›If the creditor obtains a judgment, a bank account levy may be served through a legal process.
• ›The creditor may contact your bank in connection with its asserted interest, but this does not by itself give the creditor access to account funds.

Protecting Your Banking Relationship

MCA payment distress may strain your banking relationship. Repeated overdrafts, returned ACH transactions, or levy attempts may affect how your bank views your account. If you are experiencing MCA payment trouble, it may be valuable to understand your options before the situation escalates.

Resolution strategies such as restructuring, settlement, or qualified refinancing may be worth evaluating. Each requires qualification and none is guaranteed, but understanding these options early may provide more pathways than waiting until the situation has escalated further.

If a Levy Has Been Served

If a bank account levy has been served on your business, you should consult qualified legal counsel promptly. There may be deadlines for claiming exemptions, contesting the levy, or taking other legal action. An attorney licensed in your jurisdiction can advise you on your rights and options under the specific circumstances you face.

MCA Default and MYMCAOPTIONS LLC are not law firms and do not provide legal advice. This page provides educational information only.