Contracts Signed by an Idaho Business
Since an MCA is usually a “purchase of receivables,” as opposed to a loan, the funder will collect a percentage of deposits until a “purchased amount” is recouped. Nearly all contracts signed by an Idaho business state that New York law and New York courts shall apply. So, depending upon the location of a dispute, the Idaho merchant may be more in need of a New York attorney than an Idaho attorney. An Idaho attorney is needed to enforce a judgment in Idaho, or if the merchant is thinking of filing a lawsuit in Idaho or bankruptcy.
Idaho has no commercial financing disclosure law. Nothing in Idaho requires an MCA provider to state an annual percentage rate, total cost, or estimated term before signing. Idaho’s disclosure rules for payday lenders apply only to consumer loans. Idaho’s usury statute also gives a merchant little help. Idaho Code § 28-22-104 sets 12% a year only as a default rate when the parties have not agreed on a rate in writing. Once a written contract sets the price, the statute imposes no ceiling. As a result, the usury argument an Idaho merchant can actually use comes from New York law, which the funder’s own contract usually chooses. In Adar Bays, LLC v. GeneSYS ID, Inc. (2021), New York’s highest court held that a loan carrying more than 25% annual interest is criminally usurious and void from the start. The court also held that a corporation may raise that defense.
In Re HMH Construction
The only Idaho court decision on point comes from the federal bankruptcy court. In In re HMH Construction, LLC, decided January 21, 2026, a Chapter 7 trustee sued Kalamata Capital Group over a “Revenue Purchase Agreement” governed by New York law. Under that agreement, HMH sold $158,500 of future receivables for $120,000 and remitted 15% of its weekly revenue. The judge found the trustee had plausibly alleged a disguised loan. HMH may not have been able to use the agreement’s reconciliation provisions, the weekly amount effectively set a repayment term, and the funder had recourse if HMH filed bankruptcy. The court also held that New York criminal usury works only as a defense, not as a basis to sue for money back. The trustee’s fraudulent-transfer claims went forward anyway.
Confession-of-judgment Clause
Signing a confession-of-judgment clause doesn’t bind an Idaho business like it did before. On August 30, 2019, New York revised CPLR 3218. A confession of judgment can be filed only in the New York county where the defendant resides and a business resides wherever it has a place of business. Previously, a confession could be filed against a non-resident in any county. As a result, an Idaho business without a place of business in New York is not subject to a confession of judgment in New York. And Idaho provides no alternative: The confession-of-judgment statute (Idaho Code §§ 10-901 through 10-903) was repealed effective March 31, 1975. No confession of judgment means a funder has to file suit and suit is defensible.
Prohibitions on Forum Selection Clauses
In comparison to other states, Idaho has one of the strongest prohibitions on forum selection clauses. Idaho Code 29-110(1) voids any contract term that prevents a party from suing in Idaho courts. It also voids any contract term that reduces the time in which a party can bring its suit in Idaho courts. In 1989, the Supreme Court of Idaho refused to enforce a forum clause for Florida courts in the case of Cerami-Kote, Inc. v. Energywave Corp. and in 2019 the state supreme court declined to overrule this case in T3 Enterprises v. Safeguard Business Systems. In Off-Spec Solutions v. Transportation Investors (2021), the court applied the statute to a forum selection clause that required arbitration in another state. The Ninth Circuit applied § 29-110 in federal court in Gemini Technologies v. Smith & Wesson (2019). Practically, an Idaho merchant can generally assert claims such as a recharacterization or fraud in Idaho despite a forum selection clause for New York courts. The statute applies to Idaho courts, but doesn’t prevent a funder from bringing suit in New York first.
A funder is likely to sue a merchant in New York state court based on a forum selection clause. In diversity jurisdiction it also may sue in the US District Court for the District of Idaho part of the Ninth Circuit, with locations in Boise, Coeur d’Alene and Pocatello. Bankruptcy cases will be filed in the bankruptcy court for the district. The bankruptcy court divides the counties somewhat differently so that Twin Falls, Jerome and Blaine are in the Eastern Division not Boise.
Foreign Judgments Act
Enforcing Judgments: The Enforcement of Foreign Judgments Act makes it possible to enforce a judgment from New York. The first step is for the creditor to file with the clerk of any district court in Idaho a certified copy of the judgment, which will then have the same force and effect as a judgment of the court in Idaho. Idaho Code § 10-1302. The creditor also must file with the clerk an affidavit indicating the last known address of the judgment debtor. The clerk shall send notice of the filing, and execution shall not be issued for five days after filing. Id. § 10-1303. Further, to create a lien on real estate in Idaho belonging to the debtor, the creditor must record a certified abstract, and the clerk shall not do so until the five day period has expired. Id.
Finally, the Idaho court must stay the judgment if the New York debtor establishes that it has filed an appeal in New York, or that the New York court has granted a stay, and that the debtor has met the requirements for security for the appeal or stay in New York. Id. § 10-1304.
A Writ of Execution
To attach a debtor’s bank accounts, the county sheriff serves a writ of execution on the bank. Idaho Code § 11-703 charges the creditor a $7 search fee and asks for the debtor’s last known address. Serving the writ at a location a bank has designated with the Idaho Department of Finance reaches the debtor’s accounts at every branch of that bank, whether located in Idaho or not. Affiliate institutions that are not named in the writ are not reached. Most of Idaho’s exemptions apply to natural persons, so they matter if the owner of the property signed a personal guarantee. Wage exemptions retain their effect in a bank account up to $7,500, and the homestead exemption (§ 55-1003) applies to up to $175,000 of home equity. Judgments also earn the state’s judgment rate of interest, which is 8.875% for the year beginning July 1, 2026.
The Merchant Needs a Lawyer
The lawyer who matters most depends on where the dispute stands. If a funder has sued in New York or has already won a judgment there, the merchant needs a lawyer admitted in New York. Vacating a judgment, answering a complaint, raising the Adar Bays defense, and appealing all happen in New York, and the Idaho stay under § 10-1304 depends on a New York appeal or stay. An Idaho lawyer becomes essential once a judgment is filed in an Idaho county. The same is true once a bank levy hits, when exemptions have to be claimed, or when the merchant wants to sue at home under § 29-110.
If several stacked advances have left the business insolvent, Idaho bankruptcy counsel may be the better first call, because a bankruptcy filing stops collection and, as HMH Construction shows, opens the door to avoidance claims against the funder. A pure settlement negotiator can make sense when no suit is pending. Idaho Code § 26-2223(7), however, requires a license for anyone who contracts to compromise “any account, note or other indebtedness,” and the text does not limit that requirement to consumer debt.
