Moving and Towing Companies: 6 Reviews of MCA Debt, Vehicles, and Insurance

A moving or towing company that has gotten behind on a merchant cash advance deal is in a big mess, but it has options. The place to start is six things:

• Where does the lawsuit stand?
• What does the MCA agreement let the lender do?
• Has the lender filed liens on the trucks or trailers?
• What does the insurance cover?
• Did the owner sign a confession of judgment, and what does state law say?
• How does this get fixed (settlement, refinancing, bankruptcy)?

Without a steady volume of jobs, the income from a trucking company can sink while the bills for fuel, insurance, repairs, and payroll stay level.

What has happened so far? No lawsuit yet means you are seeing a demand letter, maybe from a collection agency. Notice is like an engagement ring; it is not a marriage, but nothing good happens after it. A lawsuit is different. Depending on the court and how they served it, you have a fixed time to respond. Ignore it, and you may get a default judgment. If a judgment already exists, sometimes the first sign is a frozen bank account. Don’t move the money out. Instead, ask the bank how they got it and what information they have.

Original MCA Agreement

Dig up your original MCA agreement and read it over. A 1.35 factor rate on $100,000 means you pay back $135,000. The contract may call itself a sale of future receivables, but a court can focus on who bears the risk and how. Do the payments move up and down with your revenue? Is there a reconciliation that ties in your real revenue numbers? Does the funder bear any risk if the business fails? If a court does decide this is a loan, New York’s usury law might come into play, but a high rate factor alone isn’t automatic proof of usury.

Ask for a full payment history and look at it yourself. The FTC said that Yellowstone Capital pulled money from borrowers who had already paid in full for cash advances, and in June 2026 sent a third round of refunds that hit more than $549,000.

Next, get copies of your certificates of title and see what liens are on there. Lenders will file paperwork saying they hold an interest in your collateral as security for the debt. Generally, their claim has to be noted on the certificate of title you got. It’s not enough for them just to file a UCC Financing Statement. They may say that the amount due gives them the right to repossess without involving the courts. However, taking collateral without a court order generally has to be done peaceably.

The insurance policy you take out is the bill you cannot skip. Revenue can drop, but the insurance costs don’t. If you haul goods for hire across state lines in vehicles over 10,000 pounds that don’t move hazardous materials, federal law sets a minimum of $750,000 in liability coverage. Those minimums don’t go down when you have a late payment or two. Before any other loan payments, budget for the insurance premiums you need.

Confession of Judgment

In 2019 the Empire State limited the use of a confession of judgment. A confession of judgment is only good against a company or person residing in New York. However, an out-of-state business may count as having a residency if it has an office or place of business in New York. Signing one doesn’t end every defense; check the small print. See when and where it was filed.

Check if the contract has a clause saying that New York law and courts will control. Judgments in the Empire State carry more weight in other parts of the country than you might think. An award by a New York court may be honored by courts in the state where you live, so trucks and accounts there can be at risk. New laws in Texas in September 2025 block MCA firms from filing confession of judgments, and from drawing funds from your accounts without a perfected first-priority security interest.

What Choices You Have

You can still settle even during a lawsuit. No standard percentage applies. Before you agree to anything, look hard at four things:

• What happens to the judgment?
• What happens to the lien they have filed on your vehicles or your personal property?
• What happens to your signed personal guarantee?
• Is whatever new payment the lender suggests going to let you cover fuel, payroll, repairs, and insurance?

Don’t call the funder and admit you missed a payment before you know where you stand. It’s easy to believe they have it right when they are the ones who figured the balance. Listen, learn, and see what the actual deal is before you offer anything.

With MCA take-out financing, a financing company pays off your current merchant cash advance debt by replacing it with a loan. Sometimes getting a new loan is the right answer. Know what that does and does not do. If you have several loans, go over them all before assuming a new one covers the old ones. Debt consolidation and restructuring a debt are two different things. If your old MCA debt isn’t fully resolved, it is hanging over any new lending deal you work out.

If you settle, the IRS treats debt you settle for less than you owe as generally taxable ordinary income. However, the bankruptcy exemption can cover it, and you may not owe tax if your debts exceed your assets.

Is the loan one of several pressing problems, or just the first? When you file a Chapter 11 or Subchapter V case, you’re saying that you want to restructure your businesses while operating. The minute a case is filed, an automatic stay kicks in. The stay puts an immediate brake on many collection efforts. But some creditors can ask a judge for permission to lift the stay, and it doesn’t erase what happened before filing.

Whatever you choose, start by getting your hands on all the paperwork around the loan. Those papers include a copy of every MCA agreement; the payment histories and each and every personal guarantee. Other documents you will need include the texts or emails and records of any brokers involved in the deal, and any court papers that exist. Before you settle or pay a penny, make sure you understand what you signed, and what choices you have.