The Reality of Stopping MCA Payments
You can stop paying an MCA. The question is whether you should, and what happens when you do. Simply blocking the ACH withdrawal without a plan is dangerous.
What Happens When You Stop Paying
Within one to two weeks, the funder sends a default notice. Within two to four weeks, they may file a confession of judgment or begin a lawsuit. Within 30 to 60 days, bank account levies, UCC enforcement, or customer contact.
How to Stop Paying Strategically
- Engage an attorney before you block any ACH withdrawal.
- Send a formal reconciliation request with documentation.
- Revoke ACH authorization through your bank in writing.
- Move to a new bank account if the funder attempts unauthorized withdrawals.
- Prepare for the funder’s response with your attorney ready.
Legal Basis for Stopping Payments
Legitimate grounds include the funder breaching the contract by refusing reconciliation, the MCA being a usurious loan in disguise, or fraud in the inducement.
What You Should Never Do
- Do not stop paying without telling your attorney.
- Do not transfer business assets to avoid collection.
- Do not take a new MCA to pay off the one you want to stop.