The Path Out of MCA Debt
Getting out of MCA debt requires clear understanding, realistic assessment, and decisive action. There is no magic solution, but proven strategies work when executed with professional guidance.
Assess Your Total Exposure
Calculate the total remaining balance across all MCAs, daily and weekly payment amounts, percentage of revenue consumed by payments, personal guarantee exposure, and UCC liens filed. This complete picture determines which strategies are available.
Negotiate Settlements
The fastest and most common path out. Funders regularly accept 30 to 60 cents on the dollar for defaulted MCAs. The process involves engaging an attorney, ceasing or reducing payments as part of a legal strategy, demonstrating the settlement is the funder’s best recovery option, and documenting with a full release including lien terminations. Settlement works best with legal leverage like recharacterization defenses or fraud claims.
Restructure Payments
If you cannot assemble a settlement lump sum, restructuring reduces daily payments to a sustainable level. This keeps the total obligation but makes it manageable within your cash flow.
Challenge the Contracts
Legal challenges can reduce or eliminate your obligation. If the MCA is recharacterized as usurious, the agreement may be voided. If the broker committed fraud, the contract may be voidable. These take time but can produce dramatic results.
Consider Bankruptcy as a Last Resort
If total MCA debt exceeds what your business can sustain under any restructuring, Chapter 11 reorganization dramatically reduces obligations while keeping the business operational. The automatic stay stops all collection immediately.
The Most Important Step
Contact an MCA attorney. Every strategy on this page requires professional guidance. The consultation is free. The sooner you act, the more options you have. Waiting until your account is frozen or a judgment is entered reduces leverage and increases cost. Act now.