Welcome to Delancey Street. We're an attorney-founded business debt relief company based out of NYC. In the past, we've settled north of $100M in business debt, and we do one thing - merchant cash advance debt relief. We deal with business owners who have stacked positions, a daily ACH that's eating their revenue, intense UCC liens, and frozen accounts.
Why Massachusetts is Different (And Most Settlement Shops Don't Know It)
Here's the things that you won't read on the internet, anywhere else. Most business debt settlement marketing landing pages you read are not written by a subject matter expert. It's a marketing intern, whose googling, and regurgitating what he/she read online. No original insights, no additional context. For starters, Massachusetts banned confessions of judgment in commercial contracts. COJs - a clause where you pre-sign away your right to fight in court, were voided in MA. And on top of that, New York's 2019 CPLR 3218 amendment made it illegal for NY funders - which is many MCA lenders to file a COJ against business owners out of state.
So the single nastiest weapon in the MCA toolkit mostly doesn't work on business owners in MA.
Now, don't get excited, funders adapted. They started filing COJs in Texas, Utah, Illinois - states where it's still legal - and then domesticating the judgment back into Massachusetts. And a lot of them will try and sue you via a normal regular lawsuit.
The 93A Angle Nobody Uses
Massachusetts has a consumer protection statute, Chapter 93A, and Section 11 of it - unusual, this - lets businesses sue other businesses for unfair and deceptive practices. Most states, commercial-to-commercial, you're on your own, consumer law doesn't help you at all.
When a funder's contract reads like a "purchase of receivables" but functions like a loan - no real MCA reconciliation, daily fixed debit that never changes/goes down when your revenue tanks, personal guarantee that triggers on ordinary business failure - that's the loan versus MCA recharacterization fight, and in MA you can add a 93A claim onto it.
A funder running an analysis on whether it makes to sense to settle your file is not just pricing recovery. They're now also looking at the tail risk that you flip it into a 93A counterclaim and they're paying your lawyer. Forward Financing, an MCA lender, discovered this in Forward Financing v. NRO Boston over in Suffolk Superior.
What This Actually Looks Like in a Workout
In practice when you've got multiple positions stacked the move is - settle the most aggressive one first, not the cheapest. The funder who's calling you daily, the one threatening your customers with a UCC lien notice telling them to redirect funds to the lender, that's usually either the one in the strongest position or the weakest one. When you're trying to settle your business debt, the order of attack matters more than people think and it's case by case, always.
The UCC lien is the real issue in Massachusetts, not the judgment. UCC § 9-406 lets a funder with a lien on your business receivables send letters to your customers - your actual clients - and tell them to pay the funder instead of you. This is a financial issue, because funds now redirect to your lender. In addition, it's a reputational issue - now your customers know you're in financial distress. That happens, it can blow up customer relationships permanently, some contracts have no-encumbrance clauses that let the client walk.
The biggest mistake in the first 72 hours after you're served - calling the funder yourself to explain how hard business is. That call gets recorded, becomes evidence you can't pay, and accelerates the MCA.
The MCA Reconciliation Clause
If you're struggling to keep up with your daily and weekly MCA payment, the first thing to consider is the reconciliation clause. This is part of every MCA agreement. It's not something every lender will talk about though. There's a reason for this - it protects you. Using this clause, you can ask the lender to lower the daily, and weekly, ACH amount being debited by the lender. When you took the MCA, you sold your receivables. That means, you sold your future revenue to the lender. You didn't take a loan.
This distinction is crucial. This is the difference between a loan, and a MCA, legally, and financially. The way the lender collects, is by collecting a fixed daily and weekly payment. The amount, is based on the daily receivables they are collecting as a % of your revenue. For example, it might be a 5% withhold, or 10% withhold. This is then cemented into a daily or weekly ACH payment. So in this context, if your revenue goes down, then you are entitled to lower the daily ACH payment. But most lenders hate this clause. They will deny it, saying your revenue has not gone down. Alternatively, the lenders will slow walk the reconciliation process. For example, they'll say they haven't gotten your request, or they'll say they need more documentation. If you are at risk of defaulting, the first thing you need to do is get your documents in order, and send them in a formal notice for reconciliation. This is done via email, and also via certified mail, so that no one can deny getting it on the lenders side. Once they get the request, they are going to look at your revenue, and see if there's an actual decline.
In the event they refuse to honor the request, they are actually in default of the agreement. Many people don't know this - lenders can be in breach/default on the agreement, not just you. This is the objective. Make them honor the agreement, or create a paper trail that shows they broke the agreement.