If you took a merchant cash advance and your business is in Philly, the thing that's actually going to hurt you is not the UCC liens which will get sent to your clients if you default. It's the confession of judgment. And Pennsylvania is one of the worst states in the country to have signed one.
Welcome to Delancey Street. We're a New York based business debt settlement firm, attorney-founded, $100M+ settled, and we work MCA debt relief situations in 49 of the 50 states - including a lot of Philadelphia ones. We're not a law firm. When a case needs a courtroom, we pay for licensed PA counsel on your behalf.
Why Philadelphia is different
Here's what most "best debt relief 2026" listicles won't say, because they were written by an amateur marketing. After Bloomberg's 2018 article, New York changed CPLR § 3218 and banned confessions of judgment against out-of-state business owners. While it's true that NY COJs were the main issue at that time, the environment has changed. Lenders moved to other states, and started doing COJs in other states instead.
Pennsylvania still allows COJs in commercial transactions under Pa.R.C.P. 2950–2959, and it's one of the most funder-friendly jurisdictions left. What does this mean for you? It means an MCA funder can take your signed affidavit into the Philadelphia Court of Common Pleas, hand it to a clerk, and walk out with a judgment the same day. There's no lawsuit, no notice, no hearing, you don't get a phone call or even a courtesy notification. You find out when the bank sends you a notice that the account is frozen, your account is drained, and that there's a lien on them.
The thing I want you to understand: in most MCA paper, the choice-of-law clause picks New York OR Pennsylvania on purpose. Even if you're in a state that banned COJs years ago, the funder forum-shops you into Philly.
Strike vs. open - this distinction is the entire defense
Pennsylvania gives you two doors and people screw this up constantly because they think they're the same door.
Petition to strike
A petition to strike is a demurrer to the record - this is a jargon way of saying the judge only looks at the paperwork the funder filed, nothing else. The court can only strike if a fatal defect appears on the face of that record. Examples of things that are defects, can be: wrong amount. missing documents, etc, it's like a parking ticket where your information is totally wrong.
And this works more than you'd think. In Complete Business Solutions Group v. HMC, the Philadelphia Court of Common Pleas entered a judgment for $11,985,719.32 against a construction company. The court struck the judgment down. Why? because CBSG had put into a contract into the confessed amount that it couldn't even enforce, and the dollar figure was therefore wrong.
The leverage hiding in PA's usury rule
Pennsylvania caps interest at 6% for non-licensed MCA lenders. New York's criminal usury line is 25%. An MCA dressed up as a "purchase of future receivables" is trying to get around both. If lawyers can get a court to recharacterize the merchant cash advance as a disguised loan - does reconciliation actually work, is there real risk of loss, is the guaranty triggered on ordinary business failure - the whole enforcement structure can wobble, and the usury exposure under PA's 6% cap is brutal for the funder.
What we'd actually tell you on the phone
Don't default. Try to engage the lenders in reconciliation. Don't make promises you can't keep. It's crucial that you try to speak to the lender, and make a request for MCA reconciliation. When you took the MCA, you sold your receivables, and the lender collects by taking a fixed % of your daily receivables, in the form of a daily or weekly ACH. If your revenue goes down, then in theory, your daily ACH is supposed to go down as well, proportionate to the drop in revenue. Remember, this is all supposed to be calculated automatically. It's not meant to be a flat fixed payment. Unfortunately, most MCA lenders do not adhere to the reconciliation clause, and do not adhere to honoring the reconciliation clause in the agreement. Lenders will slow walk you, when you ask for reconciliation. They will take their time; weeks sometimes, to respond. Most will claim they never got the request. In situations like this, it's important to document everything. Send a reconciliation request via email, certified mail, etc, in order to make sure they got it. Also, it's important to make sure you send all the necessary bank statements and documentation to make sure they have all the documents, and can't push back you didn't send all the necessary documentation which will stall the reconciliation process. Another thing lenders will do is say you don't qualify for reconciliation. They'll say your revenue didn't actually go down.
Lenders inherently don't want to engage in reconciliation. Lenders would prefer you default on the MCA, rather than reconciling the MCA. If you default first, then they are not obligated to offer you reconciliation, because you already defaulted. This then allows the lenders to charge you other punitive fees, like default fees, etc, and even accelerate the repayment of the MCA.
