What Percentage of MCA Debt Can You Realistically Settle For

The number depends on leverage. Leverage depends on the law, the facts, and the funder’s assessment of what happens if the negotiation fails. There is no universal percentage. There is a range, and where you land within that range is determined by the strength of your position.

MCA settlement percentages vary widely. Some settlements resolve for 20 to 30 cents on the dollar. Some resolve for 50 to 70 cents on the dollar. Some resolve for 80 cents or more. The percentage is not determined by a formula or a standard industry practice. It is determined by the specific facts of your case, the legal vulnerabilities in your agreement, the funder’s assessment of its own risk, and the skill of the negotiation.

Factors That Drive the Percentage Down

The single most powerful factor in reducing the settlement percentage is the strength of your legal claims. If the MCA is recharacterizable as a usurious loan, the funder faces the possibility that a court will void the agreement entirely — meaning the funder recovers nothing beyond the principal already repaid. A funder staring at a potential zero-recovery outcome is far more willing to accept 30 cents on the dollar than a funder holding an enforceable agreement.

The age of the receivable matters. MCAs that have been in default for months represent a declining asset on the funder’s books. The longer the default persists, the less likely the funder is to collect the full amount through any mechanism. An aged receivable that can be resolved today at a discount is often preferable to the funder than an uncertain recovery months or years down the road.

The business’s financial condition matters. If the business has limited assets, minimal revenue, and no realistic ability to pay the full balance, the funder’s recovery through litigation is limited regardless of the agreement’s enforceability. The funder’s rational calculation is: what is the expected value of pursuing this claim through litigation, including the cost of legal fees, the time to judgment, and the collectibility of that judgment? If the expected value of litigation is less than the settlement offer, the funder settles.

The cost of litigation matters. A funder pursuing a contested MCA claim through litigation in the borrower’s home state faces legal fees, travel costs, discovery obligations, and the uncertainty of trial. If the borrower has raised credible defenses — usury, fraud, deceptive practices — the litigation becomes more expensive and less predictable. The funder’s legal costs reduce the net recovery even in a successful outcome.

Factors That Keep the Percentage High

A strong, enforceable agreement with no legal vulnerabilities gives the funder confidence in its collection position. If the agreement is a genuine purchase of receivables with a functioning reconciliation clause, no usury exposure, and no deceptive practices, the funder has little incentive to accept a steep discount.

A personal guarantee with attachable personal assets increases the funder’s expected recovery. If the guarantor owns real property, has substantial bank accounts, or earns significant income, the funder’s ability to collect through enforcement mechanisms is enhanced. The personal guarantee is the funder’s backstop, and a well-capitalized guarantor reduces the funder’s incentive to discount.

A short time since default suggests the receivable is still fresh and the funder has not yet written it down internally. Fresh receivables command higher settlement percentages than aged ones.

Realistic Ranges

Based on the interplay of these factors, realistic settlement ranges generally fall into three tiers. For cases with strong legal claims — credible usury arguments, documented deceptive practices, procedurally defective confessions of judgment — settlements in the range of 20% to 40% of the remaining balance are achievable. For cases with moderate legal claims or a mixed factual picture, settlements in the range of 40% to 60% are typical. For cases where the agreement is largely enforceable but the borrower’s financial condition limits recovery, settlements in the range of 50% to 75% are common.

DEFENSE TEAM SPOTLIGHT

Todd Spodek

Lead Attorney & Founder

Featured on Netflix's "Inventing Anna," Todd Spodek brings decades of high-stakes criminal defense experience. His aggressive approach has secured dismissals and acquittals in cases others deemed unwinnable.

NY Bar Admitted Multi-State Licensed Federal Courts

Meet the Full Team

These ranges are generalizations. Every case is different. The specific percentage depends on the specific facts, the specific funder, and the specific negotiation. An attorney who has settled MCA cases with the same funder before has the advantage of knowing the funder’s patterns, preferences, and internal settlement authority. That institutional knowledge translates into more precise targeting of the settlement range and more efficient negotiation.

The percentage is also influenced by the posture of the negotiation. A business owner who approaches settlement through an attorney, with a legal demand letter identifying specific claims and quantified damages, signals credibility and preparedness. The funder’s internal team adjusts its settlement authority based on the perceived risk of the challenge. A credible legal threat from a knowledgeable attorney produces a lower settlement percentage than a phone call from a distressed business owner asking for a break.

One final consideration: the settlement percentage applies to the remaining balance as calculated by the funder, which may itself be inflated. Before negotiating the percentage, verify the accuracy of the balance. Ensure that all payments have been properly credited, that fees and penalties are authorized by the agreement, and that the acceleration calculation is correct. Negotiating a 40% discount on an inflated balance produces a worse result than negotiating a 30% discount on the accurate balance.