Welcome to Delancey Street. This article is about settling stacked MCA debt, talking about the priority, the sequence, and the strategy that goes into settling multiple stacked MCA debt positions. Many business owners all over the country call us with four or five merchant cash advances all running in parallel. The first question is almost always the same: Which one do I have to pay first? They’re obviously contemplating business debt settlement or restructuring, but they don’t know what to do. It almost feels like a legal question, but most of the time it isn’t.
The order that matters is not the order the liens were actually filed. It is the order in which each funder can actually hurt you and the order in which you can actually buy peace of mind for you and your business. Here’s how stacked MCA debt really behaves and how we think about working through it.
What stacking does – Settle MCA Debt
So what stacking actually does.
Purchase of future receivables
An MCA is structured as a purchase of future receivables, not an actual loan, legally speaking. The funder is taking a daily or weekly payment out of your operating account. Stacking means a second, third, or fourth funder is pulling from the same account against the same bank deposits.
The math really doesn’t help you whatsoever. Each position is priced as if it were the only one. Together, when you have multiple advances that are each taking 10 to 20 percent of your daily cash flow, they can take a large chunk of your daily deposits before real business expenses hit your bank account, like payroll, rent, or inventory.
That’s why stacked files almost never fail slowly. They fail on a specific day when your ACH bounces and then all your other daily weekly deposits are also missing, and then the stacked advances all bounce at the same time. The important thing is usually we see that collapse as a result of a cash flow situation, and that’s it. That shapes everything that follows.
Lien priority background
So one of the things that matters is that lien priority. Now, lien priority is real, but it really rarely decides who gets paid. Almost every MCA company will file a UCC blanket lien covering all your accounts, your equipment, and other property tied to the business.
UCC blanket lien order
Under UCC Article 9, priority. Usually goes to secured parties based on who files first, or who files first perfectly. The first file is senior, the next is junior, the third is junior to them as well. That rule is documented and it generally matters in one situation: a liquidation or a proceeding where proceeds get distributed in order. It also matters, though, when you try to get new financing, because a new lender usually wants first position and won’t take fourth.
But in a stacked MCA situation, priority is mostly theory. MCA funders are not looking to foreclose on your forklift or your other business equipment. They pull the daily, weekly payment, and when that stops, they sue, they try to get a judgment, and they try to levy your bank account. A fourth-position funder with an aggressive collection firm can drain your bank account before the first-position funder even realizes you defaulted or missed a payment. Money in the account is not the same as a lien ranked. So treat priority as useful background, but not as your negotiation map.
Sequence of pressure after missed payment
Here’s the sequence of pressure after you miss. The typical progression is very, very predictable. Your payment bounces, the agreement declares default, and often you’ll see the MCA lender accelerate the full purchase amount plus other punitive fees, for example default fees, legal fees, blocked ACH fees.
There’s a whole whirlwind of fees they throw at you. Often this can represent a 20 to 40 percent increase on the overall balance. You’ll get a demand letter, usually from their counsel.
Demand letter to bank levies
Then comes a lawsuit, a judgment, and a post-judgment enforcement, which is bank levies on business and personal accounts. Liens and notices will be sent to your customers demanding they pay the funder instead of you. Virtually every MCA carries a personal guarantee, so typically the guarantor is usually named alongside the company in any and all lawsuits.
COJ confession of judgment speed
One issue can change the speed. Confessions of judgments let an MCA lender skip the lawsuit entirely. In 2019, New York amended the laws to prohibit filing confessions of judgments in New York against debtors who are not New York residents or don’t have a New York place of business. This was a direct response due to the abusive practices of MCA funders who were misusing COJs in the state of New York.
Having said that, it didn’t abolish the tool. A New York-based business can still face one. In addition, there are other states that allow MCA lenders to use COJs against New York businesses and businesses all over the country. Bottom line is, the state may have changed, but the COJ is still in practice.
How to sequence settlements
So what is the sequence of events and how to sequence settlements? Sequencing is the whole game, and it’s a judgment basis, not a formula. You have to use discretion.
- Start by ranking positions based on threat, not balance.
- Second, look at how much each funder has already recovered.
- The third thing you have to think about is Deciding between clearing smaller positions and attacking big ones.
Threat not balance
The funder with a confession of judgment, or one that has already sued, or one that is known for fast levies or filing UCC liens against you and exercising them, is usually going to be your urgent problem, even if it’s the smallest position. A large funder that is slow and process-driven can often wait and will take longer to settle.
How much each funder recovered
A funder that has collected most of the purchase amount has recovered its principal and is deciding between a discounted number, which represents potential profit, and a long collection fight. That funder usually has room because they’ve already recovered their principal. A funder that just advanced you money last month and got almost nothing back has little room to discount because settling means taking a real loss.
Smaller positions and big ones
Clearing two small positions can remove the daily drain and reduce the number of parties who can levy you. That can also buy you operating room, but it also results in you spending cash that the large positions will take notice of.
Funders compare notes and share brokers and law firms. It is common for funders to coordinate with each other in terms of recovering their funds at the same time. If one learns you paid another in full while pleading hardship, your credibility is shot.
This is generally why we prefer approaching the whole stack with one consistent story and proportional offers rather than picking off creditors quietly. Typically in situations like this, we will use your bank statements and your credit card processing statements as evidence, and funders will inevitably ask for them. It is important that you do not tell a story that contradicts itself from one funder to the next because they are most certainly sharing notes amongst themselves.
Facts that change settlement numbers when settling MCA debt
Here are some facts that could change the numbers. There are several specific issues that can move settlements more than any form of negotiation. One is the reconciliation language.
MCA reconciliation language
Most MCA contracts include a reconciliation clause letting them adjust payments to your actual deposits. Courts have treated that provision as meaningful. In Davis versus Richmond Capital Group, New York’s First Department sustained claims that agreements were actually loans subject to usury laws because of the discretionary reconciliation terms and allegations that the funders actually refused to reconcile.
Having said that, that is a piece of court precedent. Which is important if you decide to litigate, but it’s not a guarantee, and often outcomes will depend on the specific contract and conduct. Still, a funder that ignored a written reconciliation request is in a weaker spot than the one who honored it.
Another thing to factor in is regulatory exposure. Enforcement is real in the space. The FTC banned RCG Advances and its owners from the MCA industry, and a court later ordered a related company to pay almost $20 million. In 2025, the New York Attorney General announced a settlement with Yellowstone Capital and its various entities, including a $1 billion judgment and cancellation of almost $500 million in outstanding debt by over 18,000 businesses, and more importantly, a permanent ban from the MCA world.
Another point of leverage is disclosure and registration laws. About 10 states now require commercial financing disclosures, and these rules govern conduct at origination and generally do not void an agreement. But if there is noncompliance, this could be a potential argument. Having said that, it’s not a reset button for your debt.
Live business cash
Another variable to think about is whether you are still operating. A funder who is settling with a live business is going to be expecting certain cash. A funder that is chasing a closed shell is going to be likely chasing a guarantor. Live businesses usually get better terms.
Lump sum settlements and installment plans
One of the things that we’ve noticed in the past is that lump sum settlements often buy the deepest discounts because they end the file. Installment plans usually preserve cash for you, but usually come with a stipulation which will reinstate the full accelerated balance if you miss even one payment. One late wire can undo months of work.
Bank line and SBA loan
Another thing to ponder is what other debt you have. If you have a bank line or an SBA loan, those agreements have their own covenants and their own workout process, for example an offer in compromise. If you’re stripping cash to settle MCAs, it can create a default somewhere else and more consequential. SBA loans, for example, are usually collateralized and can result in a deeper hole because they can liquidate your business assets.
Bankruptcy last option
One last variable to think about is bankruptcy. If you are struggling with business debt, filing bankruptcy can be a last option for you. There are many forms of bankruptcy protection, such as Subchapter 5, which can enable you to deal with stacked MCA debt. In order to understand which option works best for you, you should speak to a business debt settlement company that has experience settling stacked MCA debt. As of 2026, the debt limit was around 3 million if you opt for Subchapter 5 of Chapter 11.
Stacked MCA debt takeaway
So what does this all add up to? The main takeaway is that stacked MCA debt is not a puzzle. It is something that can be solved. It is a math equation.
Lien rank will tell you who gets paid in a liquidation, but it doesn’t tell you who’s going to empty your account faster. The practical work is identifying which funder will move fastest, understanding what each one has already recovered from you, and reading your own reconciliation language before you need it, and more importantly, making offers based on what your bank statements support.
If you do this in a coordinated way, you can usually get real reductions. But if you do it after you’ve defaulted, you will often pay the loudest creditor the most. At Delancey Street, we look at the whole stack first because settling one position while ignoring others is how you end up settling twice. And creating other problems for yourself.
