Request in writing an itemized list of what the funder claims you owe, base an opening offer on what they advanced and the cash you can put together, use the leverage you have gathered, send all offers in writing and do not pay a penny until an officer of the MCA company signs a payoff agreement.
See also whether you should negotiate with the MCA company directly and how to modify your MCA payments with the funder directly.
What do I need before I negotiate MCA debt directly?
First get the number you are negotiating with, in writing, itemizing what the MCA company purchased, what you have paid and what they added, especially after a claimed default. Default fees, the default rate and attorney fees can all be negotiated separately from the balance.
Demand an accounting under Section 9-210 of the Uniform Commercial Code. The funder must respond within 14 days, free once every 6 months and up to $25 after that. They may say the provision excludes buyers of accounts, which most of them claim to be.
What is my opening offer to the MCA funder and how do I justify it?
Base your opening offer on something you can justify, ideally how much the MCA company advanced to you, shown on the first page of your contract. For example, if they advanced $80,000 and purchased $112,000, you have paid $61,000, and they now claim $51,000 plus $9,000 in default fees, you can say they have recovered 76% of their advance, the $9,000 is a separate negotiation, and a lump sum wired now beats litigating for something in a few years.
Know what number you are willing to pay so you know when to walk away. No reliable source gives a percentage range to use.
What leverage do I have if I am negotiating with the MCA company directly?
Your best leverage without a lawyer may be evidence that they are not reconciling the account as the agreement requires. In a February 2026 New York Appellate Division, First Department case, People v Richmond Capital Group, the court found the agreements were loans partly because the company never reconciled accounts, even when merchants asked. Tell the funder you asked for reconciliation on a certain date and they have not done it.
Where you do business matters too. In New York, they can only file a Confession of Judgment in the county where you reside under CPLR 3218(b). In Texas, since September 1, 2025, Confession of Judgment provisions in MCA contracts are void and no automatic debits are allowed unless the provider has a perfected security interest. The last thing a funder wants is bankruptcy, which triggers an automatic stay and exposes your last 90 days of payments to a preference claim.
Can the MCA funder use my negotiation against me later?
No, pursuant to Federal Rule of Evidence 408, Pennsylvania’s Rule 408 and New York’s CPLR 4547, if the claim’s validity or amount is disputed (put the dispute in writing), an offer of compromise cannot be used against you. Put “For settlement purposes only FRE 408/CPLR 4547” at the top of every offer. Discoverable facts, such as your bank balances, are not shielded just because you mention them.
Do I need a signed settlement agreement, or is the funder’s “yes” on the phone enough?
If your contract is governed by New York law and has a no-oral-modification clause, any change, including a partial discharge, must be in writing and signed by the party against whom enforcement is sought. See GOL 15-301; GOL 5-1103 (no new consideration required for discharge). The signature that matters is the funder’s, not yours.
Before you pay, make sure the signed document covers:
- How much and how you will pay, with wire instructions verified by calling a number you already have;
- For installments, due dates, any cure period, any “snap back” clause restoring the full balance after a missed payment, and any new confession of judgment the funder wants (which, under CPLR 3218, can be entered without a lawsuit in New York);
- A release of your business and any personal guarantors;
- A UCC-3 termination statement filed by a set date (sales of receivables fit the UCC poorly, see UCC 9-513, so the contract must require it);
- Withdrawal of notices to your customers or processors, and an end to ACH debits;
- Dismissal with prejudice of any lawsuit, satisfaction of any judgment, and return of any unfiled confessions of judgment;
- Whether the funder reserves any claims against you; and
- Whether you will receive a 1099-C.
An authorized officer of the funder should sign, and you should countersign and have a copy in hand before paying.
If the funder won’t release the guarantee or commit to the UCC-3, consider trading some money for those terms; a couple of extra points may be worth it. When the funder counters, move toward it in increments that get smaller each round. See also How Can I Get My MCA Provider to Lower the Daily or Weekly Payments Without Me Defaulting?
What are some frequently asked questions about settling MCAs?
Can’t I just mail them a check for less than the full amount and mark it “paid in full”?
You could try, but under UCC 3-311, a “full satisfaction” check will only discharge a claim if (1) the claim is disputed or hasn’t been reduced to a specific amount; (2) you tendered the check in good faith; and (3) the “full satisfaction” language is conspicuous. If the funder designates a separate place for disputed payments, or refunds the money within 90 days, the discharge fails.
Will I have to pay taxes on the discharged amount?
Lenders that qualify as “applicable entities” must report discharges of $600 or more under 26 USC 6050P (via 1099-C). See also IRS Pub 4681 (debtors should report canceled debt even if they do not receive a 1099-C). There are a number of exclusions, including bankruptcy and insolvency, under 26 USC 108.
I have a confessed judgment against me in Pennsylvania, and I know I only have 30 days to file a petition to open or strike it. Won’t negotiating with the funder use up all my time?
Yes. Petitions to open and strike must be filed within 30 days of service under Pa.R.C.P. 2959, and negotiating with the funder will not stop the clock.
What should I do after I pay?
Get a zero or “paid in full” balance letter, confirm the ACH debits stopped and the lawsuit was dismissed, and in about 30 days run a UCC search to make sure the UCC-3 termination statement has been filed.