Can You Stop Daily MCA Payments? Options and Risks

Yes, you can physically stop making the payments. You can block the ACH, close the account, and stop answering the funder’s calls. The debt does not go away, though, and the funder will usually consider it a default. You can expect a rapid chase for repayment, and possibly an outright lawsuit. Stopping without a plan is a knee-jerk reaction to overwhelming stress, not a strategy. There are usually safer ways to stop the daily pulls than simply skipping them. The most common way of stopping those payments is negotiating a settlement with the funder, although you can also restructure the ACH payments, use the contract’s reconciliation clause, or file bankruptcy.

Once in Default

Making even one late payment can count as a default under many agreements. After an ACH pull comes back negative, or you otherwise miss a payment deadline, expect a demand letter from the funder. Once in default, the funder can call in the entire balance. While this is happening, expect a steady flow of phone calls and emails, both to you and to the guarantor. The funder may start a lawsuit for repayment of the debt. Don’t ignore these legal papers! Show up in court and participate in the process. If you fail to show up at all, the court can enter a default judgment, which is one where you are found to owe the money, even without you being there to defend yourself.

If you default and lose the lawsuit, expect an execution process, where the creditor can go after your assets to repay the money owed. Execution can mean bank levies, restraining orders, or liens on business property. These are serious tools, and can include freezing operating cash, so it’s best to talk to a lawyer about your exact options if a funder is threatening execution.

Cutting off the electronic transfer may feel great, but it usually hurts you down the road. Many agreements count this as default, and some will even say that it is interfering with the funder’s receivables. Closing the account, or “changing banks” can have its own dangers. First, many funding contracts treat this as a default, so you may be billed for the entire amount due right away. Second, the funder may argue that you are interfering with its contractual rights, by closing your bank account. If your bank account has several MCAs pulling against it at the same time, cutting off just one by blocking its ACH is likely to leave you in the middle of a free-for-all.

Stopping payments isn’t always a desperate move by someone who simply can’t take it anymore. You can halt payments for a deliberate, positive reason, too. If you are saving up to offer a lump-sum settlement, as part of an ongoing lawsuit, or if you want to explore your options under a “reconciliation” provision in the contract, a lawyer may advise stopping to save cash. Cutting off the cash flow to one funder can be bold and reckless, when the response is unknown, or thoughtful and brave, if done in preparation for a negotiation. It just depends on whether you do it with a plan or without one.

A Smaller Settlement, or Restructuring the Payments

Homing in on a smaller settlement, or restructuring the payments is often a much better way out. It can cut the total owed. Restructuring the loan, or working out a plan, may make sense if your business can still support itself on a lower payment. Be careful, however; some restructuring agreements might leave you in a worse position if you default again.

Bankruptcy is another route. Filing a Chapter 7 or Subchapter V petition starts the automatic stay at once, so it will pause collection on debts that predate it. Subchapter V only applies to companies that are mostly small business operations, with $3,424,000 or less in total debt, with at least half of it from the business.

State law can also matter. Texas law, as of September 1, 2025 (HB 700) gives business borrowers some new levers to use against funders. It bans auto-debits by a funder without a first priority security interest. But there’s a catch: although this law has a $10,000 penalty, you cannot sue the lender using this provision.

Keep in mind that each MCA is a commercial contract. That means that two different MCA agreements may be very different. Under one contract, you might have the right to ask for adjustments to the contract at certain times. Other contracts will look very different.

Whether to keep digging or consider stopping is a serious question. How many MCAs does the company have? How many of them are in default? How much are the daily MCA pulls taking? What revenue does the business actually bring in? How many days of payroll are left? Is there a lawsuit started yet? Is there any cash for a lump-sum payoff? Is there a personal guarantee? If the issue is one merchant advance, that isn’t yet in default, and which the company thinks it can negotiate a lump-sum deal on, this is a very different starting place from four or more stacked MCAs, with one lawsuit already served and a frozen operating account. In that second case, you should probably have an attorney to walk you through this disaster.

Already Quit Paying

If you’ve already quit paying, stay calm and organized. Gather all contracts and communications, keep a record of any funder attempt to pull money out or contact you, and scan the court dockets to see if the creditor has started a lawsuit. Tell each lender the same thing about your plight. Catching up on a commercial debt through a second round of funding is never a good idea. Always get a workout agreement reviewed by your own lawyer. When you are served in a lawsuit, it’s serious, so show up and participate. Even though it’s very intense, this is not a criminal case.

In the end, not paying is often the choice of last resort and still not certain to solve anything. Save yourself time and money by finding out all your options before letting your business slip over the edge.