Thank you for visiting our website. This article is about MCA debt relief lawyers in Memphis, Tennessee.
Ranked lists and legal mechanics
We’ll be talking about the best companies and sort of what you need to look for if you’re looking for MCA debt relief.
Now, you’ve searched this phrase and you got a page full of ranked lists. Almost all of them are ads.
There’s no Tennessee agency which licenses merchant cash advance debt relief firms. There’s no state scorecard and there’s no public database of settlement results. In addition, law firms do not report their MCA outcomes anywhere.
So a top five exposed list is one of two things: a firm ranking itself or a lead generator selling your contact information. This matters more than the sounds. If the ranking is not built on verifiable data, the only thing left to compare is the actual legal mechanics. That’s what this piece does.
We’re publishing material on MCA defense, confession of judgments, and use recharacterization. Treat that and every other competitor page the same way, as a starting point, not proof that this is the end goal.
Tennessee confession judgment statute
So let’s talk about the Tennessee statute that changes your position first. Tennessee Code Annotated Section 25-2-101 voids any power of attorney or authority to confess judgment before an action is filed and before any service of process. A judgment based on that is also void. Subsection B preserves confessions given after a lawsuit is filed and after service.
So if you read any MCA contract you signed, the confession rider is almost always executed the day the money is funded, long before any lawsuit actually exists. This is exactly the situation the document Section 25-2-101 describes. So a Tennessee court who is applying Tennessee law will not or should not enter judgment on it.
Foreign judgment enrollment in Tennessee
Here’s the catch most business owners miss. The funders usually do not go to Memphis. They pick New York or another state and get judgment there, and then they bring it to Tennessee.
Tennessee Code Annotated Section 26-6-104 lets an authenticated foreign judgment be filed with the clerk of any circuit or chancery court, and the clerk then treats it like a Tennessee judgment. Now, there’s Tennessee Rule of Civil Procedure 3A.01, which confirms enrollment happens by notice, not by filing a new complaint. Once it’s enrolled, it is subject to the same procedures and defenses that are available to a local judgment.
Before enrollment after enrollment
But now the issue is the fight is about the validity of the out-of-state judgment. This is the sequence that decides your case if it gets this far. Before enrollment, you are arguing Tennessee policy. After enrollment, though, you are usually arguing jurisdiction and service. This second fight is much harder.
One more piece of context. New York amended CPLR 3218 in 2019 after realizing that creditors were using New York confessions of judgment against debtors with no connection to the state whatsoever. The affidavit now has to be filed where the defendant said it resided. That means that they can only use it against New York State businesses and New York State residences.
That amendment closed the easiest path that most lenders were using to use a New York confession of judgment against borrowers in Tennessee. Having said that, it did not close every path, and funders have now shifted filings to other states that are more lenient to the confession of judgment.
Usury and recharacterization
Now, if you’re contemplating MCA defense, one of the things you’ll think about is usury, which is the argument everyone advertises but few explain. Tennessee has set a maximum effective rate under 47-14-103. In general terms, the ceiling for written contracts is the lesser of 24% per year or four points above the average prime loan rate. Willfully collecting usury is a Class A misdemeanor.
Needless to say, an MCA priced at a 1.45 factor rate over four months blows past that. So the question is, why don’t funders lose instantly? Because usury laws only apply to loans. The MCA you took is drafted as a purchase of future receivables. If it’s a true sale, then there’s no loan, there’s no interest rate, no usury. This is why recharacterization is part of a legal strategy.
Meaningful reconciliation finite term recourse
The best known frameworks for this are coming from New York’s Appellate Division in the LG Funding case, which looked at
- whether there was meaningful reconciliation
- whether the agreement has a finite term
- and whether the funder has any recourse if the merchant files for bankruptcy and shuts down
The underlying question is quite simple if you think about it: who eats the loss if sales dry up and the business has to shut down? If the funder is entitled to repayment no matter what, then it looks like a loan.
There are two honest caveats, though. First, this is a New York case law. It’s persuasive but not binding on Tennessee courts. And unfortunately, Tennessee has no equivalent published MCA framework which settles the question. Second, many contracts choose New York law anyway and use New York as the venue, so the test may apply through the contract rather than through Tennessee laws.
Any lawyer who is telling you Tennessee’s 24% cap will automatically void your advance is skipping several steps or is just misinformed. So the question is, what actually moves this analysis further? Well, the facts are in your documents and, of course, what you experienced when you took this MCA.
For example, is the reconciliation clause automatic or does it require your written request and the funder’s discretion? Is there a stated end date on the MCA? Does the bankruptcy filing trigger a default and a personal guarantee liability? Did the funder most importantly ever refuse a documented reconciliation request or ignore it? Any documentation you have about this should be saved. That’s evidence.
Law firm versus business debt relief company
Now, one of the questions people ask is, do I need a law firm versus a business debt relief company? This is a practical distinction, but ranking articles often blur it. Business debt relief sits in a thin regulatory gap.
The FTC’s telemarketing sales rule advance fee ban is the rule that stops consumer debt settlement companies from charging any fees upfront. But 16 CFR exempts most business-to-business calls from this, and there is a narrow carveout for non-durable office and cleaning supplies and continued exposure from misrepresentation.
Having said that, your MCA is business debt, so the protection consumers get do not reach you. In addition, state law has not filled the gap either. As of this article, Tennessee has not enacted any commercial financing disclosure or broker registration laws, unlike a group of other states.
The takeaway for you right now is there is no Tennessee disclosure form, there’s no required APR, and no state registration through every broker-dealer deal. Having said that, only a licensed lawyer can appear in Shelby County Circuit or Chancery Court, move to vacate an enrolled judgment, or file on your behalf in the Western District of Tennessee Bankruptcy Court in Memphis. A non-lawyer, though, can negotiate by calling funders and get a settlement agreement in place. That is a real service.
Subchapter 5 bankruptcy leverage
In certain situations, bankruptcy could be leverage, but the numbers are very, very specific. Subchapter 5 of Chapter 11 is the most realistic tool you have as a Memphis business owner with many stacked advances. For cases filed after 2024, the debt limit reverted back to 3.4 million. So if you have advances under 3 million, then it’s safe to say that you could opt for subchapter 5 of Chapter 11.
The issue is, once you file bankruptcy, everything about your business is on the record and available to the public domain. The strategic point is that bankruptcy stops the daily ACH and the garnishments all at once. It also puts the recharacterization argument in front of a bankruptcy judge, where the funder’s secured claim will depend on whether it really bought anything or actually just gave you a loan.
Compare answers not rankings
The honest way to really compare your options is ask any firm or company you’re speaking to a few different questions.
- Has a judgment already been entered somewhere else, and has it been enrolled in Tennessee yet?
- Which state laws are actually governing the contract, and how does that change the recharacterization question?
- If this becomes a litigation issue, will a licensed Tennessee admitted lawyer appear to handle it?
- And what happens to the fee if the funder refuses to settle?
Most importantly, ask them about their strategy and what they’ve done similarly for other clients with other lenders similar to your own. Compare the answers and, most importantly, not the rankings. The leverage you get is going to come from the unique facts of your case and exactly what the lender did and what you did and what defenses that avails you. If your business is genuinely going out and under, then it might make sense to file bankruptcy. But if you’ve got only a few positions and you’ve got real cash flow, business debt settlement could be a viable option.
