When an MCA funder gets a judgment against your business in another state — usually New York — their next move is to domesticate that judgment in Texas so they can seize your local bank accounts, garnish receivables, and levy assets. But domesticating a foreign judgment in Texas is not automatic. Texas law provides multiple defenses that can delay, reduce, or completely block enforcement.

This article explains the domestication process and the defenses available to Texas businesses under the Uniform Enforcement of Foreign Judgments Act (UEFJA).

How Foreign Judgment Domestication Works in Texas

Under the Texas UEFJA (Civil Practice & Remedies Code Chapter 35), a judgment creditor can file an authenticated copy of an out-of-state judgment with the clerk of any Texas county of proper venue. The creditor must also file an affidavit with names and addresses and mail notice to the debtor.

Once filed, the foreign judgment is treated as a Texas judgment — meaning the creditor can pursue execution, garnishment, and other enforcement remedies. But this is where your defense begins.

The UEFJA specifically states that a foreign judgment is subject to the same defenses for reopening or staying as a Texas judgment. That means you can challenge it on any ground a Texas judgment debtor could use — including that it is void, satisfied, or obtained improperly.

Five Defenses to Block Foreign Judgments

1. Lack of Personal Jurisdiction

The rendering court must have had personal jurisdiction over you. If you are a Texas business with no meaningful contacts with the forum state, the court may not have had jurisdiction — making the judgment void.

Key indicators: - You were not properly served with the lawsuit - You have no office, employees, or business operations in the forum state - Your only connection to that state was signing the MCA contract (which may not be enough for jurisdiction if the forum selection clause is found unconscionable)

A judgment entered without personal jurisdiction is not entitled to full faith and credit. Texas courts allow collateral attacks on this basis.

Evidence to gather: Obtain the service returns from the original case. If service was to a wrong address, an unauthorized person, or a method not permitted by that state's law, you have a strong jurisdictional challenge.

2. Due Process Violations

If the judgment was obtained without giving you notice or an opportunity to be heard — as happens with confessions of judgment and improper defaults — it violates due process and is void.

This defense is particularly strong when: - The judgment was entered via a COJ (no hearing at all) - You were never actually served with the lawsuit - The lawsuit was served to an old address and you never received it - Summary procedures were used that denied you a meaningful opportunity to defend

3. Fraud in Obtaining the Judgment

If the MCA funder obtained the judgment through extrinsic fraud — fraud that prevented you from fully participating in the case — Texas can refuse to recognize it.

Examples of extrinsic fraud: - The funder told you "don't worry about this lawsuit, we won't enforce it" while secretly taking a default judgment - The funder forged service signatures or lied to the court about service - The funder promised to negotiate a settlement while simultaneously pursuing judgment - The COJ affidavit inflated the amount beyond what was actually owed

Present evidence of any communications or misconduct showing the judgment was not legitimately obtained.

4. Public Policy Violations

Texas can refuse to enforce a judgment that violates Texas public policy. In the MCA context:

While public policy alone is a tougher argument for sister-state judgments (due to full faith and credit), coupling it with due process violations makes it significantly stronger.

5. Judgment Not Final or Expired

Texas courts will stay enforcement if: - The judgment is on appeal in the original state - A post-judgment motion is pending in the original court - The judgment has expired under the original state's law - The judgment was entered more than 10 years ago (CPRC §16.066 — action on a foreign judgment must be started within 10 years)

If you have filed a motion to vacate in the original court, bring proof to the Texas court — this triggers a mandatory stay under UEFJA §35.006(a).

Procedural Steps to Resist Domestication

File a Motion to Stay Enforcement

As soon as you learn about the foreign judgment filing, file a motion to stay enforcement under CPRC §35.006. Request that the court hold off on execution, garnishment, and turnover until your challenges are heard.

Seek a TRO if Assets Are at Risk

If the creditor is about to levy bank accounts or garnish receivables, seek an immediate TRO from the Texas court. Show the court: - A likelihood of success in voiding the judgment (COJ, no service, etc.) - Irreparable harm if enforcement proceeds (payroll at risk, business closure) - Balance of equities favors pausing collection

Attack the Judgment in the Rendering State

File a parallel motion in the original court to vacate or reopen the judgment. This is important because: - Texas courts are more receptive when you can show the original court is also reconsidering - If you get the judgment vacated at its source, the Texas domestication falls apart - An appeal or pending motion in the original state triggers a mandatory stay in Texas

Watch the 10-Year Clock

Texas judgments become dormant after 10 years. For foreign judgments, check the age — if approaching 10 years, delay tactics may run out the clock. Under CPRC §16.066, an action on a foreign judgment must be started within 10 years of that judgment becoming final.

Garnishment Defense

If the MCA creditor has already obtained a writ of garnishment to freeze your bank accounts:

  1. Move to dissolve the garnishment — if the underlying judgment is being attacked, the garnishment should be lifted
  2. Assert exemptions — Texas law protects certain funds (wages are generally exempt from garnishment in Texas)
  3. Check procedural compliance — did the creditor serve you with notice of the garnishment as required by TRCP 663a? Failure to give prompt notice can dissolve the garnishment
  4. Argue special funds — if frozen funds are needed for payroll and operations, argue they should be released subject to a bond

The Nuclear Option: Bankruptcy

If all else fails, a bankruptcy filing triggers an automatic stay that immediately halts all collection efforts — including enforcement of domesticated judgments, garnishments, and levies. In bankruptcy, you can challenge the MCA claim's validity and potentially have it discharged entirely.

This article is part of the MCA Defense Guide. Call (469) 607-8552 for a free consultation.