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MCA Attorney New York: COJ Ban, Usury Law, and What It Means for You (2026 Guide)

New York is the center of MCA litigation. Here's what NY law lets an MCA attorney do, how the 2019 COJ ban changed the game, and how to find one.

By Bar Alezrah14 min readPublished April 16, 2026 · Updated April 16, 2026

If your MCA dispute is in New York, you are in the state that has shaped the law for every other state. The 2019 Confession of Judgment reform (S6395), the appellate recharacterization line that starts with Champion Auto Sales v. Pearl Beta Funding and continues through Davis v. Richmond Capital Group, and the Attorney General's public enforcement record are the three pillars that make NY different. A good New York MCA attorney works at the intersection of all three. This guide covers what NY law actually lets an attorney do for you, where the leverage points are, and how to find counsel who can use them. It is not legal advice about your specific case, which only a licensed attorney can give.

Why New York Is Ground Zero for MCA Litigation

Most large MCA funders were organized in or relocated to New York because the state's Uniform Commercial Code, contract law, and Commercial Division civil practice made it a predictable place to enforce agreements. Standard MCA agreements typically select New York law and New York venue, which means the same judges see these cases over and over. That concentration has produced a deeper, more sophisticated body of MCA-specific case law in New York than anywhere else.

For a defendant, this cuts two ways. On one hand, the pro-enforcement history is real: NY courts routinely uphold MCA agreements when the documentary record supports a true purchase of receivables. On the other hand, the same judges have also been willing to recharacterize transactions as loans when the economic substance does not match the contract's label, and appellate panels have laid out a multi-factor test that defense counsel can actually work with. The result is a legal environment where well-prepared defenses win and sloppy ones lose, which is why MCA-specific experience matters more in New York than almost anywhere else.

New York is also where most public enforcement actions have landed. The Attorney General has pursued funders who used deceptive practices, abused the confession of judgment system, or filed falsified default affidavits. Those enforcement actions produce a public record that private defense counsel can cite. A Manhattan litigator who knows the AG's recent actions can frame a private case in language judges already understand.

The 2019 Confession of Judgment Ban: What S6395 Actually Says

For years, the most feared clause in an MCA contract was the confession of judgment. The merchant signed it at closing, the funder held it in a drawer, and on any alleged default it could be filed in a New York county clerk's office. The clerk entered judgment without notice, without a hearing, and without any opportunity to defend. The funder then used that judgment to restrain bank accounts and levy assets, often before the merchant even knew a case existed.

Senate Bill S6395, signed in 2019, amended CPLR 3218 to end this practice for out-of-state debtors. The bill text is on the New York State Senate site. In plain terms, after the amendment, a confession of judgment could only be filed in New York if the debtor was a New York resident or entity at the time the confession was signed. That simple fix cut off the pipeline of out-of-state COJs that had been routed through Manhattan and Westchester clerks.

A few things the 2019 reform did not do, which merchants and even some lawyers get wrong:

• It was not retroactive to void old judgments automatically. A COJ entered before the amendment became effective is still an enforceable judgment unless a court vacates it. Vacatur requires a motion and legal grounds (fraud, lack of personal jurisdiction, or procedural failure).
• It did not ban COJs against New York businesses. A merchant actually located in New York can still sign an enforceable COJ.
• It did not eliminate funder lawsuits. Funders now file regular plenary actions in the Commercial Division or Supreme Court instead of walking in a COJ. Those cases move slower but are more contestable.

Practically, a New York MCA attorney now spends much less time racing to vacate ambush judgments and much more time defending filed lawsuits on the merits. That is a meaningful change in the operational shape of the practice.

Recharacterization Doctrine: The NY Appellate Tests

The headline legal fight in a New York MCA case is whether the advance is a true sale of future receivables (outside usury) or a disguised loan (inside usury). New York appellate courts have built a multi-factor framework. The reported decisions that most defense lawyers treat as anchor points include Champion Auto Sales, LLC v. Pearl Beta Funding, LLC and the LG Funding line, followed by Davis v. Richmond Capital Group LLC and subsequent cases that refine the factors.

The factors courts have looked at include:

• Reconciliation. Does the contract give the merchant a real mechanism to adjust the daily or weekly pull downward when revenue drops, and does the funder actually honor it?
• Finite term versus indefinite collection. A true purchase accepts the risk that slow sales lengthen the collection period. A contract that effectively guarantees a specific payoff date looks more like a loan.
• Recourse on a personal guarantee tied to bankruptcy. If the guarantee survives the merchant's bankruptcy or is triggered automatically on any dip in receivables, that tips toward loan characterization.
• Whether the funder's recovery is contingent on actual receivables or essentially guaranteed. A deal with daily fixed ACH pulls and no real reconciliation has loan economics even if the contract calls it a purchase.

If a court recharacterizes, New York's usury caps come into play. The contract can be void, and the funder can be left with arguments about quantum meruit or equitable recovery that often settle for a steep discount. Recharacterization is not automatic and not easy, but it is the doctrine that gives merchant defense real leverage. An attorney who has argued or briefed cases in this line is meaningfully more valuable than one who has only read them.

NY Usury Caps and When They Apply to MCAs

New York has two usury regimes. The civil usury cap is 16% under General Obligations Law §5-501, and the criminal usury cap is 25% under Penal Law 190.40. Both apply only to loans. As long as an MCA is characterized as a true sale of receivables, neither cap applies, which is why funders build their contracts the way they do.

The usury question becomes live only after recharacterization. If a court rules that an advance is actually a loan, the effective annual rate is almost always above 100%, which lands above both usury caps. The practical consequence in New York case law has been contract voidance in criminal usury cases and partial voidance or rate reduction in civil usury cases. Neither is automatic, and courts sometimes allow the funder to recover principal even when voiding interest.

For the defense lawyer, the usury argument works as the second step after recharacterization, not the first. A brief that leads with "this is usurious" without doing the recharacterization groundwork will lose. A brief that establishes the loan character first and then walks into the usury cap has a real shot.

NY Commercial Division and How Cases Flow

Most contested MCA cases in New York land in the Commercial Division of the New York Supreme Court in counties like New York (Manhattan), Kings (Brooklyn), Queens, Westchester, and Nassau, as well as in federal court when diversity jurisdiction applies. The Commercial Division has specialized rules and judges who see complex commercial disputes every day, which generally produces cleaner motion practice and faster rulings than the general Supreme Court track.

The lifecycle of a typical filed MCA case in the Commercial Division looks like this. Complaint and summons are served. The defendant has 20 to 30 days to answer, depending on whether service was personal or substituted. The defendant files an answer with affirmative defenses or a pre-answer motion to dismiss. Discovery opens, with document production, depositions, and sometimes expert discovery on reconciliation or industry practice. Summary judgment motions come next, and the stronger recharacterization cases often survive to trial. Most cases settle before trial, but settlement leverage depends on what the record looks like after motion practice.

A key resource is the New York Unified Court System portal, which publishes Commercial Division rules, case filings, and judge assignments. An attorney who can read the judge's prior MCA rulings before filing is a materially better advocate than one who cannot.

Finding a New York MCA Attorney

The first filter is licensure. You want an attorney admitted to practice in New York, not an out-of-state firm that pairs with local counsel on an ad hoc basis. The New York State Bar Association runs an attorney directory and lawyer referral service that will filter by practice area and county. Membership and clean disciplinary history are public information.

Beyond licensure, the specific things to verify include:

• Commercial Division experience. Not every New York litigator works in the Commercial Division. MCA cases that survive early motion practice almost always land there. Ask the attorney for recent case numbers so you can look them up on the court's public docket.
• Published work on MCA recharacterization. Lawyers who have actually briefed this area often have articles, CLE materials, or law review citations in their record. That is public evidence of depth.
• Recent case count. One MCA case a year is a hobby. Ten or more is a practice. The number matters because the law moves fast.
• Willingness to explain strategy before engagement. A qualified attorney will walk you through what the recharacterization analysis looks like on your specific contract before asking for a retainer. That is due diligence for both of you.

For a broader view of what MCA lawyers actually do and how they charge, the sibling article on MCA lawyer cost covers fee structures across the market. For attorney search tactics that apply in any state, the MCA attorney near me guide covers local search and vetting.

Questions Specific to NY Cases

When you interview a New York MCA attorney, the generic "how many cases have you handled" question is useful but not sufficient. NY-specific questions sharpen the picture.

• Have you briefed or argued any case in the Champion Auto Sales, LG Funding, or Davis v. Richmond Capital line of recharacterization authorities?
• Which Commercial Division judges have you appeared before in MCA matters?
• Are you familiar with the public positions the New York Attorney General has taken in recent MCA enforcement actions?
• Have you filed a motion to vacate a confession of judgment under CPLR 5015 since the 2019 reform?
• Have you defended a case where NY law applied to an out-of-state merchant under a choice-of-law clause? Those cases have specific jurisdictional wrinkles.
• Do you handle your own depositions and oral arguments, or is that work passed to an associate or co-counsel?

The goal is not to stump the attorney. It is to confirm the attorney has worked the specific machinery your case will run through. Anyone worth hiring will be comfortable with these questions. For related context on what defense lawyers do generally, see the MCA defense attorney guide. For the full legal framework of MCAs in the state, see MCA laws in New York. And if a lawsuit has already been filed, the best MCA debt relief companies comparison covers when a relief firm can still be useful in parallel.

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