What Should I Do If I Get a Demand Letter From an MCA Funder?
Read it carefully, check it against your contract and your payment records, and respond in writing before any deadline. A demand letter usually comes before a lawsuit, so it's the moment to negotiate or get legal advice, not to ignore the mail.
What does an MCA demand letter say?
It states that the funder believes you've breached the contract, lists the amount it claims, and demands payment or action by a date. It sometimes mentions the personal guarantee, a confession of judgment or other remedies.
How do you check the facts in the letter?
- Compare the claimed balance with your records of payments made.
- Check whether fees or default charges were added and whether the contract allows them.
- Look for a reconciliation clause and whether you asked for one.
- Note the deadline.
Should you respond in writing?
A written response creates a record. Acknowledge the letter, state any disagreements with the balance and propose a path forward if you want one, like a payment plan or a settlement. Keep it factual.
When should you involve an attorney?
If the amount is large, a lawsuit is threatened, or a confession of judgment is involved, talk to a business attorney before you respond. An attorney can often negotiate better terms and spot problems in the funder's claims.
What settlement options are there?
Funders often prefer a negotiated resolution to a lawsuit. A lump sum settlement, a payment plan or a modification are all common. Get any agreement in writing before paying.
Why be careful with debt relief companies?
Some companies promise to make MCA debt disappear for a large upfront fee. Understand exactly what they'll do and what they'll charge before signing anything.
Is this legal advice?
This is general information, not legal advice.
What if the letter comes from an attorney?
Sometimes the demand letter comes from the funder's law firm rather than the funder. That usually means the funder is preparing to sue. Treat it as serious, but not as the end of the road. Attorneys for funders negotiate settlements regularly, and a prompt, reasonable response often opens that door.
How do you check the balance they claim?
Ask for a ledger showing every payment the funder has collected and every fee added. Compare it with your bank statements. Disagreements about the balance are common, and clearing them up can change the whole conversation.
How do you keep the business running meanwhile?
While you work through a demand, keep the business operating and keep records of your sales. A funder that sees an operating business is more interested in a workable plan than in a lawsuit against a closed one.
Why do the deadlines matter?
Missing the deadline in a demand letter doesn't automatically mean a lawsuit, but it removes your chance to shape what happens next. Respond before it, even if only to ask for more time.
How can Afterfirst help with this?
Call 877-FUND-654 if you've received a demand letter on an advance. We'll help you understand the numbers and your options, and tell you when it's time to bring in an attorney.
What else do owners ask about this?
- Can an MCA company sue me?
- Can an MCA funder garnish my wages?
- Can an MCA funder call my family or employees?
More short answers on this topic are on the legal questions FAQ, and the MCA payment calculator runs the numbers for your own file.
Have a question we didn't answer?
Ask us on the call. Call 877-FUND-654 with any question. We call you back, usually the same business day, and we always talk with you before we shop your file.