Emergency TRO: Stopping MCA Collections and Protecting Your Business

When an MCA funder is draining your bank account through daily ACH debits, or a judgment creditor has frozen your operating funds through garnishment, your business may be days away from closing. Payroll bounces. Suppliers cut you off. Customers leave.

A temporary restraining order (TRO) can stop this immediately — sometimes within hours. Texas courts have the power to halt collections, release frozen accounts, and give your business the breathing room it needs to fight back.

When You Need Emergency Relief

Seek a TRO when any of these situations arise:

• Daily ACH debits are draining your operating account — the funder is taking $500 to $5,000+ per day, leaving nothing for payroll or rent
• Your bank account has been frozen by a garnishment based on an out-of-state or COJ judgment
• The MCA funder is contacting your customers or interfering with your receivables
• Multiple MCAs are "stacking" debits — two or three funders are all pulling from the same account simultaneously
• You just discovered a judgment entered against you without your knowledge

The key question is irreparable harm — can money damages later fix this? If your business will close without its operating cash, the answer is no. Courts understand this.

How a TRO Works in Texas

A TRO is an emergency court order that can be issued ex parte — meaning the judge can grant it without the other side being present, if you can show immediate and irreparable harm.

Timeline

1. File a verified petition and TRO application — your attorney prepares the filing and includes a sworn affidavit from you describing the emergency
2. Present to the judge — in many Texas courts, the judge can hear an emergency TRO application the same day
3. TRO issued — if granted, the order takes effect immediately and lasts up to 14 days
4. Temporary injunction hearing — within 14 days, the court holds a full hearing where both sides present arguments. If you prevail, the injunction continues through the case

What the TRO Can Order

• Stop all ACH debits from your bank accounts
• Release frozen funds so you can meet payroll and operating expenses
• Prevent the funder from enforcing any judgment (including domesticated foreign judgments)
• Stop the funder from contacting your customers, vendors, or payment processors
• Require the bank to unfreeze your accounts

Building Your TRO Application

A successful TRO application must show four elements:

1. Probable Right to Relief (Likelihood of Success)

You must show that your underlying legal claims have merit. Strong grounds include:

• Usury: The MCA, if recharacterized as a loan, charges criminally usurious rates — voiding the contract
• HB 700 violations: The funder's ACH debits violate Texas law because they lack a first-priority security interest. The COJ clause is void under Texas Finance Code §306.001
• Void judgment: The judgment being enforced was obtained through a COJ without due process, or the rendering court lacked jurisdiction
• Unauthorized collections: The funder's daily debits have no lawful basis

2. Imminent, Irreparable Harm

Explain the specific harm your business faces without the TRO:

• "If these withdrawals continue, we will miss payroll this Friday, forcing closure"
• "The frozen account contains our only operating funds — without access, we cannot pay suppliers, employees, or rent"
• "We have 25 employees who will lose their jobs if the business closes"
• "The loss of customer relationships and goodwill cannot be compensated by money damages later"

Include an affidavit from the business owner verifying these facts.

3. No Adequate Remedy at Law

Money damages later cannot resurrect a closed business. Key arguments:

• A money judgment against the funder months from now cannot bring back employees, customers, or supplier relationships
• The business will permanently lose its market position and goodwill
• Once closed, the business may never reopen

4. Balance of Equities

The harm to your business without the TRO far outweighs any harm to the funder from a short pause in collections:

• The funder faces only a temporary delay in receiving payments
• The funder has a judgment lien or UCC lien protecting its interest
• Your business faces existential threat — permanent closure
• The TRO merely maintains the status quo (business operating, dispute in litigation)

The Bond Requirement

Texas courts typically require the applicant to post a bond for a TRO/temporary injunction — an amount set by the court to protect the other party from wrongful injunction. Strategies to minimize the bond:

• Argue that the injunction merely prevents unlawful conduct (unauthorized ACH debits, enforcement of a void judgment) — no bond should be required to stop illegal acts
• Propose a modest bond ($1,000-$5,000) given the funder's existing collateral protections (UCC liens, judgment liens)
• Show that a large bond would defeat the purpose of the TRO by draining the funds you need to operate

After the TRO: Temporary Injunction Hearing

The TRO buys you 14 days. At the temporary injunction hearing, you must present stronger evidence:

• Testimony from the business owner about harm, daily ACH impacts, and business operations
• Expert testimony on the effective APR and loan recharacterization (if applicable)
• Documentary evidence: The MCA contract, payment records, bank statements showing debits, the COJ, judgment records
• Legal arguments: Usury, HB 700 violations, due process, UEFJA defenses

If the judge grants the temporary injunction, it remains in effect through the pendency of the case — potentially months or years. This extended protection gives you time to litigate, negotiate, or resolve the dispute.

Combining TRO with Other Defenses

The TRO is not a standalone strategy — it is the emergency first step in a comprehensive defense:

1. Day 1: File TRO application to stop collections and protect operating cash
2. Days 1-14: File answer and counterclaims (usury, DTPA, declaratory judgment)
3. Day 14: Temporary injunction hearing — present full defense
4. Ongoing: Motion to vacate COJ judgment, challenge domestication, pursue counterclaims
5. Settlement: With litigation pressure mounting, negotiate favorable resolution

What to Bring to Your Attorney

If you need emergency relief, come prepared with:

• The MCA agreement (all pages, including any separate COJ or guarantee documents)
• Bank statements showing ACH debits (last 3-6 months)
• Any judgment documents you have received
• Garnishment notices from your bank
• Payroll records showing upcoming obligations
• A list of employees who will be affected
• Any communications from the funder (emails, letters, texts)

Time matters. The sooner you act, the more your attorney can do to protect your business.

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