That's not an exaggeration, that's the contract you signed. Most business owners assume there's some kind of buffer — miss a few payments, get a warning letter, maybe a phone call, then eventually they escalate. That's how traditional loans work. MCA agreements don't work like traditional loans. And the timeline between "missed payment" and "lawsuit filed" is shorter than most people can believe.

The MCA Default Trigger Is Not What You Think

Here's where it gets uncomfortable. You don't actually have to miss a payment to be in default. Under most MCA agreements, default is triggered the moment you do any of the following:

  • Block or reverse a single ACH debit
  • Change your bank account without the funder's written consent
  • Switch payment processors
  • Take on additional financing (this is the stacking clause, and nearly every MCA agreement has one)
  • Sell, transfer, or restructure the business in any way

So if you blocked one ACH because your account was short, that's a default. If you took a second MCA to cover the first one, that's a default. You didn't miss a payment — you violated the agreement. And the funder now has the legal right to accelerate the entire balance and sue you. Immediately.

But Let's Say You Actually Missed Payments — How Fast Do They Move?

Most MCA funders will attempt to re-debit your account 2 to 3 times after the first failed ACH. Each attempt triggers an NSF fee from your bank ($25–$35 per attempt) and a returned payment fee from the lender. A single missed week can cost you over $500 in fees alone — before anyone even picks up a phone.

After 3 to 5 failed ACH attempts (roughly 5 to 10 business days), most funders escalate. But some don't wait that long at all. Some funders have filed lawsuits within 72 hours of the first missed payment. That's not a scare tactic, that's documented in New York courts where the majority of MCA litigation happens.

The Confession of Judgment Problem

Here's the part nobody tells you about until it's too late. Many MCA agreements — especially those governed by New York law — include a confession of judgment (COJ). You signed it when you took the advance. What it means: the funder can obtain a judgment against you without even filing a traditional lawsuit. No hearing. No chance to respond. They walk into court with the COJ, and a judgment is entered against you and whoever personally guaranteed the MCA.

Some states have banned or restricted COJs (New York limited them in 2019 for out-of-state borrowers), but the practice is still alive. And if your MCA agreement was structured under New York jurisdiction — which most are — the funder may still use this route.

Bottom line: A confession of judgment can turn a missed payment into a frozen bank account in under a week.

What About the Funders Who Don't Sue Right Away?

Not every funder files immediately. Some will try collections first — aggressive, in-house collections. You should expect calls on your business line, your cell phone, and the personal guarantor's phone within 48 hours. Some funders will start calling your customers and vendors (they have your bank statements, they know who pays you). That's not illegal. They have the right to do it under most MCA agreements.

But make no mistake — the collections phase is not a grace period. It's a pressure campaign designed to extract payment before they spend money on attorneys. If it doesn't work within 2 to 4 weeks, the lawsuit is coming. And some funders skip this step entirely.

The Realistic Timeline

Here's what it actually looks like, from missed payment to lawsuit:

  • Day 1–3: Failed ACH attempts, NSF fees stacking, lender's system flags the account
  • Day 3–5: Collections calls begin. Aggressive. Multiple times per day.
  • Day 5–10: Funder sends a formal default notice (some contracts don't even require this)
  • Day 7–14: UCC lien notices go out to your payment processors, customers, and vendors — redirecting your receivables to the funder
  • Day 10–30: Lawsuit filed, or confession of judgment entered. Bank accounts frozen.

That's the reality. 10 to 30 days from the first missed payment to a lawsuit — and sometimes faster. There is no 90-day window. There is no workout period unless you negotiate one. The funder's default playbook is built for speed because that's how they recover money.

So What Should You Actually Do?

If you're reading this because you've already missed payments — or you're about to — here's what matters:

Do not ignore the funder. Silence accelerates everything. The moment you go dark, they assume you're hiding assets or preparing to close the business. That's when they file.

Do not take a second MCA to cover the first one. That triggers the stacking clause, puts you in default on the original agreement, and doubles your exposure. This is the single most common mistake we see.

Do not move money between accounts. They're watching the ACH activity. Moving deposits to a new account is a default trigger and it looks like fraud to a judge.

Talk to someone who handles MCA defaults before you do anything at all. Not your accountant. Not your cousin who's a lawyer. Someone who actually negotiates with MCA funders every day and understands the specific agreements you signed.

At Delancey Street, we negotiate directly with MCA funders to restructure or settle your debt — before the lawsuits land, before the bank accounts get frozen, before the UCC liens choke off your cash flow. We're attorney-owned, we've seen every version of this situation, and we know exactly how these funders operate.