A UCC Lien on Your Business Is Not the End — We Can Challenge It

When a merchant cash advance company files a UCC-1 against your business, it can feel like a wall has gone up between you and any path forward. We help New York business owners understand what that lien actually means, whether it can be challenged, and how to get it removed.

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What a UCC-1 Lien From an MCA Funder Actually Does to Your Business

A UCC-1 financing statement is a public filing that an MCA funder records with the state to put the world on notice that it claims a security interest in your business assets. In plain terms, it is a lien — and most MCA agreements are written so the lien covers everything: your receivables, inventory, equipment, bank accounts, and any other business property you own.

 

This type of filing is called a blanket lien, and it creates a serious problem when you need conventional financing. Banks and SBA lenders run UCC searches before approving loans. When they find an open UCC-1 lien from an MCA funder, they treat your assets as already encumbered — and most will decline to lend until the lien is released. If you have stacked advances from multiple funders, you may have multiple competing liens on the same collateral, compounding the problem further.

 

The key point is this: a UCC lien is a filing, not a judgment. It can be terminated, amended, or challenged — and doing so is often a central part of resolving an MCA dispute.

Grounds We Use to Challenge a UCC-1 Lien

Not every UCC-1 filing is valid, and not every valid filing is properly maintained. We review the underlying MCA agreement and the UCC filing itself to identify every available basis for challenge.

 

Common grounds we pursue include:

 

  • Invalid or defective filing. The funder failed to properly identify the debtor, the collateral, or the filing jurisdiction, making the lien legally defective.
  • Over-broad collateral description. Many MCA funders describe collateral in sweeping terms that exceed what the agreement actually authorizes. An over-broad description can be challenged and narrowed through amendment.
  • Payments not credited. If the advance has been partially or fully repaid but the funder has not filed a termination statement, the lien may have no remaining basis and should be released.
  • Stacked liens from competing funders. When multiple MCA companies have filed UCC-1s against the same assets, priority disputes arise and the validity of subordinate liens can be contested.
  • Settlement or payoff not reflected. When an MCA dispute is resolved — through negotiation, litigation, or bankruptcy — the UCC lien must be terminated as part of that resolution. We make sure it is.

How UCC Lien Releases Get Negotiated as Part of an MCA Settlement

In many cases, the most effective path to releasing a UCC lien is resolving the underlying MCA dispute. When we negotiate a settlement with an MCA funder, lien termination is a required component of that agreement — not an afterthought.

 

A settlement that reduces what your business owes but leaves an open UCC-1 on the books does not fully resolve the problem. We negotiate for a complete resolution: a reduced payoff amount, a written settlement agreement, and a UCC-3 termination statement filed promptly upon payment. When the lien is released, your business assets are freed and you regain access to conventional financing on your own terms.

 

For situations where the funder refuses to negotiate in good faith, or where the underlying MCA agreement itself is predatory or legally defective, we are prepared to defend through litigation. Our MCA defense work spans negotiation and the courtroom — whichever path gives your business the best outcome.

The Four Situations We See Most Often

The Blanket Lien That Blocked a Bank Loan

A business owner applies for a line of credit or SBA loan, gets to underwriting, and is told the application is denied because of an open UCC-1 from an MCA funder. The funder may have been paid months ago — or the advance may still be outstanding. Either way, the lien is still on the books and it is killing access to capital.

Multiple Stacked Liens From Different Funders

Some business owners took advances from two, three, or more MCA companies over a short period. Each funder filed its own UCC-1. Now the business has a stack of competing liens, each funder claiming priority over the same collateral, and no clear path to resolving any of them without addressing all of them.

A Lien That Survived a Paid-Off Advance

The advance was paid in full, but the MCA company never filed a termination statement. The UCC-1 is still active. The business owner has no idea it is there until a lender pulls a search. We pursue termination directly — and if the funder does not cooperate, we have legal tools to compel it.

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Brass balance scale with two pans on a central stand, one pan hanging higher than the other.

Why Businesses in New York Work With Aronow Law on UCC Disputes

We have been handling commercial debt disputes, MCA defense, and UCC lien challenges for New York businesses for over two decades. We understand how MCA funders operate, how their agreements are drafted, and where the leverage points are — both at the negotiating table and in litigation.

 

What we offer is direct, personal attention to your situation. When you call or reach out, you speak with us — not a case manager, not a paralegal screening your call. We review the actual UCC filings, the underlying agreement, and your business's financial position before we advise you on a course of action. We also handle MCA lawsuit defense, confessions of judgment, and restructure and settlement in the same engagement — so if your UCC lien dispute is connected to a broader MCA problem, we address all of it together.

Frequently Asked Questions About UCC Lien Challenges in New York

  • What assets are protected when filing Chapter 7 bankruptcy in New York?

    New York's exemptions protect home equity up to $204,825 for New York residents, up to $5,500 in vehicle equity, all qualified retirement accounts, household goods, clothing, and tools of your trade. New York also allows filers to choose between state and federal exemption sets — Aronow Law reviews both during your consultation and recommends the option that protects the most for your specific situation.

  • How long does Chapter 7 bankruptcy take in Nassau County?

    Most Chapter 7 cases filed in the Eastern District of New York reach a full discharge in 90 days from the filing date. The process involves a brief meeting of creditors — typically a short administrative hearing — followed by the discharge order. There are no repayment obligations and no ongoing court involvement after discharge.

  • Do I qualify for Chapter 7 bankruptcy in New York?

    Eligibility is based on a "means test" comparing your income to New York's median income for your household size. If your income falls at or below that threshold, you qualify directly. If it exceeds the threshold, you may still qualify after allowable expenses are deducted. Many Nassau County residents with regular income well over $150,000 will qualify. Aronow Law runs the means test calculation as part of your free consultation.

  • Can I keep my car if I file Chapter 7 in New York?

    In most cases, yes. New York's vehicle exemption protects up to $5,500 in vehicle equity. If your car equity is worth more than what you owe the bank and the equity exceeds the exemption amount, the trustee may evaluate it — but most filers with a financed vehicle or a modest older vehicle keep their car. Aronow Law reviews your specific vehicle equity position during the consultation and can add other exemptions to protect that equity.

  • Will Chapter 7 stop my wage garnishment?

    Yes. Filing Chapter 7 triggers an automatic stay that halts wage garnishments immediately — the same day the case is filed. If your employer has been withholding wages under a garnishment order, that order is stayed upon filing. Aronow Law also handles the formal steps to ensure the garnishment does not resume after discharge. Any garnishment taken after filing will be returned when Aronow Law contacts the sheriff.

Talk to Us About Your UCC Lien — Free Consultation, No Time Limit

A UCC lien on your business does not have to stay there. Whether the advance is paid off, still outstanding, or part of a broader MCA dispute, we can review your situation, explain your options, and put a plan in place. Call us at 516-762-6700 or reach out through our contact page to schedule a free consultation — no clock running, no pressure.