When a business owner is buried under the weight of MCA debt, the promise of quick relief can seem like a lifeline. But as with any lifeline, the details matter.
Today, two forms of commercial debt settlement dominate the online landscape. Both promise relief. Both are aggressively marketed. And both can leave your business worse off than where it started.
For lenders, attorneys and business owners alike, understanding these models isn’t just a matter of strategy—it’s about survival.
Two Models, Same Risk: False Solutions to Real Problems
🛑 Stall and Save: The Delay That Destroys
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”—but controls that account.
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: Monthly payments are redirected to an escrow fund controlled by the settlement firm.
- Step 4: Time passes. Creditors grow impatient. Lawsuits are filed. Accounts are frozen.
- Step 5: Months later—often after irreversible damage—a settlement offer is made, but the business may no longer be viable.
“Their primary ‘strategy’ is most often to stall creditors by advising business owners to stop making payments and instead save money for a future lump-sum settlement. What is sold as a structured plan is, in reality, a delay tactic designed to maximize their earnings at the business owner’s expense.”
—ABFJournal
Let’s say a business stops payments on $100,000 of MCA debt:
- 🚨 Within 30 Days: Late fees and penalties begin to pile up
- 🚨 Within 60 Days: Lenders accelerate the debt; the full balance is now due
- 🚨 Within 90 Days: The first lawsuit arrives. Often, owners don’t even realize they’ve been sued until their bank account is frozen.
- 🚨 Within 120 Days: Assets are seized. Vendor relationships are destroyed. The business is in freefall.
“If a business owner becomes overwhelmed by MCA debt or other business loans, they should consult with a small business restructuring expert before committing to any debt relief program. Taking the right steps now can mean the difference between recovery and financial ruin.”
—ABFJournal
This model doesn’t just fail to protect the business. It often guarantees its collapse.
Let’s also look at the cost. For a $100,000 MCA debt enrolled in a stall-and-save program, here’s a realistic breakdown of the fees business owners often face:
| Fee Type | Amount | Why It’s a Problem |
| Upfront Fee | $15,000 (15%) | Paid before any negotiation begins |
| Monthly Fees | $1,000+ per month | Paid while creditors grow more aggressive |
| Success Fees | $8,750 (35% of savings) | Reduces any negotiated gains |
| Extension Fees | $36,000 over 3 years | The longer the delay, the more they profit |
Total paid: $60,000+—often before any creditor has seen a dime.
⚠️ The “80% Payment Reduction” Pitch: A High-Stakes Gamble
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 here’s what’s not mentioned.
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 plain English: a 9-406 notice tells your customers they now owe your revenue to the MCA—not you. And if they’re unsure, most will simply stop paying until it’s resolved. Your cash flow dries up, and you can’t make payroll, pay rent, or service vendors.
The strategy sounds appealing. But it assumes perfection. If even one lender doesn’t cooperate, your entire revenue stream—and business—can collapse.
A model that relies on every MCA lender renegotiating terms can be a recipe for disaster. If payment relief is the goal, it must be paired with a structural strategy to protect the business—its receivables, its operating accounts, and its ability to function—even if one or more MCAs refuse to negotiate new payment terms. In short, reduced payment terms may help—but they cannot be your only strategy. Make sure any firm you engage has contingency plans to protect your revenue in the event a single creditor doesn’t cooperate.
Ask These Questions Before You Sign Anything
Business owners, lenders, and trusted advisors should be on high alert when evaluating debt relief firms. The ABL Advisor article “10 Questions Business Owners Must Ask Any MCA Debt Relief Firm” provides a clear starting point. Among the most important:
- How do you get paid—and when? If a firm makes money whether or not the debt is resolved, their incentives are misaligned.
- What happens if a creditor refuses to negotiate or sues? Real solutions include structural defenses—not just wishful thinking.
- Do you use legal or statutory tools to protect the business during the process? Or do you just refer out to attorneys once things go south?
- Can you show a track record of full debt resolution—not just payment delays?
“Don’t assume that debt settlement companies are acting in (the business’s) best interest — or are legitimate.”
— NYC Department of Consumer and Worker Protection
If you can’t get clear, confident answers to these questions, walk away.
✅ What Real Debt Resolution Looks Like
The true alternative to settlement schemes is debt restructuring. Unlike tactics that focus solely on delay or negotiate-only promises, legitimate restructuring fixes the core issues and protects the business during the process.
At Rise Alliance, our name is our methodology: RISE—Restructure, Insulate, Strategize, and Emerge. Each part of this model reflects the real steps necessary to protect, stabilize, and ultimately restore a distressed business.
That includes:
- Cash Flow Relief—Restructure: Creditor negotiations that ease the payment burden are often part of the strategy—but never the whole strategy. If one or more creditors refuse, a real restructuring plan has legal and structural mechanisms to shield the business from aggressive actions like lawsuits or UCC 9-406 notices.
- Receivables and Revenue Safeguards—Insulate: A well-structured solution ensures that your operating accounts and receivables are insulated—so even if a single MCA turns hostile, your revenue stream stays intact.
- Vendor and Customer Continuity—Insulate: Preserving trust and continuity with vendors and clients is critical. Real restructuring avoids scorched-earth tactics like payment stoppages that damage relationships.
- Transparent Fees and Aligned Incentives: No enrollment fees. No billing for inaction. Fee structures in true restructuring models are clear, and they reward resolution—not delay.
- Strategize: This phase focuses on setting the business up for a full financial reset. Depending on the company’s condition, that may mean preparing to refinance out predatory lenders through conventional lending—or, if needed, executing a full Article 9 restructuring to create a clean, fundable new balance sheet. The goal is to transition from distress to long-term viability, with a capital structure that supports real growth.
- Emerge: After the restructuring process, a new foundation for growth has been established. Rise Alliance remains a partner through this phase—helping ensure that operations align with industry KPIs, monitoring financial performance, and supporting long-term sustainability so that the business never again becomes over-leveraged or vulnerable to predatory capital.
Cash flow relief alone isn’t enough. Without structural protection, one uncooperative creditor can unravel everything. Real restructuring prepares for that—and prevents disaster.
Final Thought: You Only Get One Shot
Most business owners in distress only get one chance to choose the right partner. Choosing wrong doesn’t just delay recovery—it can eliminate the possibility entirely.
The stakes are high. A misstep isn’t just expensive—it’s existential. Don’t fall for the illusion of easy relief.
Ask the hard questions. Know the risks. And demand a solution that protects your business, not just your payments.
Sources:
- “The Debt Settlement Trap: How Predatory ‘Relief’ Schemes Endanger Businesses and Lending Relationships”—ABF Journal
- “10 Questions Business Owners Must Ask Any MCA Debt Relief Firm”—ABL Advisor
