1
Payment Reduction Only
A House of Cards
A newer trend in the debt relief market promotes massive payment reductions—up to 80%—through aggressive negotiation with MCA lenders. And in some cases, this may be partially true: certain MCAs might agree to modified payment terms.
But these firms rely on every MCA lender agreeing to revised terms. That’s rarely the case in reality. If even one refuses, it can trigger a UCC 9-406 Notice—a devastating collection action that diverts a business’s receivables directly to the lender.
Citing Section 9-406 of the UCC:
“[The secured party] also notified [the account debtor] that payments made to any party other than [the secured party] would not discharge [the account debtor’s] obligations and liabilities with respect to its accounts receivable.”
— Hodgson Russ LLP in ABL Advisor
In Plain English:
A 9-406 notice tells your customers that the MCA now owns your receivables—and that paying you won’t count. Most customers freeze payments rather than risk legal exposure (or having to pay the invoice twice), which instantly chokes off your revenue.
These firms have no plan to protect your business if that happens.
2
Stall & Save
A Trap that Leads to Collapse
This is the model that mirrors the playbook of traditional consumer debt settlement. It instructs business owners to stop paying their MCA lenders entirely and, instead, save toward a lump-sum settlement. The firm charges hefty upfront fees and begins diverting payments into a so-called “settlement fund”—an account that they control.
Here’s what typically happens:
Step 1: The business pays 15–20% of the enrolled debt as an upfront fee—before any creditors have been contacted.
Step 2: The firm advises the business to stop paying lenders, telling owners to “trust the process.”
Step 3: Weekly payments are redirected to an escrow fund controlled by the settlement firm—or worse, commingled in the firm’s operating account, leading to potential mismanagement or fraud.
Step 4: MCAs don’t wait. Receivables are frozen. Accounts are swept. Lawsuits are filed.
Step 5: Months later—often after irreversible damage—a settlement offer is made, but the business may no longer be viable.