The Legal Ground You’re Standing On
Indiana MCA law: the three facts that shape every option
Every resolution strategy — renegotiation, settlement, defense, refinancing — plays out differently depending on these three pieces of Indiana law. A firm that can’t speak to them isn’t the best firm for a Indiana file.
1Usury limits & the recharacterization question
Indiana has no MCA-specific rate cap; its consumer credit code caps (top tier 36% under Ind. Code 24-4.5-3-508) govern consumer credit. What isn't consumer-limited is the criminal loansharking statute: Ind. Code 35-45-7-2 makes it a Level 6 felony to knowingly receive consideration for a loan of property at more than twice the § 508 rate — effectively above 72% — and a Level 5 felony if force or threats are used to collect. MCAs are documented as receivables purchases, so these provisions reach an advance only if a court recharacterizes it as a loan under the risk-based factors (meaningful reconciliation, finite term, recourse on nonpayment). Many stacked MCA files carry effective costs above 72%, so recharacterization is not an academic question here.
Sources: Ind. Code 24-4.5-3-508 (rate tiers) · Ind. Code 35-45-7-2 (loansharking felony) · Levenfeld Pearlstein — MCA recharacterization in bankruptcy
2Confessions of judgment in Indiana
Banned in-state — but NY confessions enforced anyway Indiana bans confessions of judgment about as strongly as any state: pre-dispute confession agreements are void (Ind. Code 34-54-3-2, -3), foreign judgments resting on them are declared unenforceable (34-54-3-4), and knowingly procuring or enforcing a cognovit note is a Class B misdemeanor (34-54-4-1). Yet in the 2018 EBF Partners decisions, the Indiana Court of Appeals held the federal Full Faith and Credit Clause overrides all of it: a validly obtained New York confession-of-judgment judgment must be enforced in Indiana so long as the rendering court had jurisdiction. New York's 2019 amendment narrowed that channel for newer contracts, but the lesson stands — an Indiana merchant's protection depends on where the funder can get its judgment, not on Indiana's statutes alone.
Sources: Ind. Code 34-54-3-4 (foreign cognovit judgments) · Ind. Code 34-54-4-1 (cognovit misdemeanor) · Rubin & Levin — cognovit enforcement in Indiana after EBF Partners
3Commercial financing disclosure: where Indiana stands
Indiana has not enacted a commercial financing disclosure law — multi-state surveys list the enacted states (California, New York, Utah, Virginia, Connecticut, Florida, Georgia, Kansas, Missouri, Texas) and Indiana appears in neither the enacted nor proposed columns. Indiana merchants hold no statutory right to pre-signing cost disclosures; notably, neighboring Missouri now requires them, so an Indiana business comparing offers has strictly less paper protection than its neighbor across the state line.
Sources: Venable — Missouri disclosure law alert (lists enacting states)
How funders actually enforce here: Funders obtain judgments in their contract-selected forums and domesticate them under Ind. Code 34-54-11-1: an authenticated judgment filed with any Indiana court clerk is treated like an Indiana judgment for enforcement, subject to motions to reopen, vacate, or stay. The EBF Partners cases confirm even New York confessions were domesticated this way before the 2019 New York amendment narrowed the channel. Funders also perfect UCC Article 9 security interests in business assets, filed and searched through Indiana's INBiz portal. Ind. Code 34-54-11-1 (foreign judgment filing) · Amundsen Davis — Confessions of Judgment, Indiana Style
