Which MCA to Default on First

Pull every single MCA agreement you signed. Every one. And look for the following things, in this order:

This is the single most important factor. A confession of judgment (COJ) means the lender can walk into court, file a judgment against you, without you even knowing about it, and freeze your bank accounts. No hearing. No notice. No 30 days. If you're in New York, or if your agreement has a New York choice of law clause, this is a real and immediate threat. Some funders can get a COJ judgment entered and an account freeze executed within 48 to 72 hours of your default. That's not an exaggeration.

If one of your MCAs has a COJ and another one doesn't, you keep paying the one with the COJ. Period. You do not default on that one first under any circumstances.

Some MCA companies sue everyone. Some don't. This is not guesswork, this is public record. You can look up the funder's name on court databases (NY eCourts, PACER for federal) and see exactly how many lawsuits they've filed in the last 12 months. If a funder files 200 suits a year, they have a legal infrastructure built for enforcement. If a funder files 5 suits a year, they're more likely to negotiate, sell the debt, or let it sit.

The funders who litigate aggressively are the ones you keep paying as long as possible. The ones who don't are the ones you can default on with more breathing room.

Almost all of them did. But check anyway. A UCC-1 filing means the lender has a security interest in your receivables, your equipment, and in some cases your entire business assets. At the moment of default, they can send notices to your customers, your credit card processor, and anyone else who owes you money, telling them to redirect payments to the funder. Not every funder actually does this. But the ones who do will choke your cash flow within days.

If one funder has a UCC lien and another doesn't (rare, but it happens with smaller lenders), you default on the one without the lien first.

This matters, but not for the reason you think. A funder with $15,000 remaining on your purchased amount is less likely to spend $8,000 on legal fees to chase you. A funder with $150,000 remaining will absolutely lawyer up. The economics of enforcement change based on what's at stake. Smaller balances are less likely to get litigated aggressively, which makes them safer to default on first.

Every MCA has a personal guarantee. But some are more enforceable than others. If the guarantee is tied to a specific individual with identifiable assets (a house, a car, a savings account the funder knows about), that's a high-risk guarantee. If the guarantee is vague, or the guarantor has no assets to seize, enforcement becomes harder for the lender and more expensive. That doesn't mean they won't try. It means they'll try the easier targets first.

Here's how you should think about it, from safest to default on first, to most dangerous:

Default first (lowest risk):

MCAs with no confession of judgment

Funders with low litigation history

Smaller remaining balances (under $25,000)

Funders who haven't filed UCC liens, or haven't enforced them historically

Default last (highest risk):

MCAs with a confession of judgment, especially with New York jurisdiction

Funders known for aggressive litigation and fast account freezes

Large remaining balances where the economics justify legal action

Agreements with detailed personal guarantees tied to real, identifiable assets

They default on all of them at once. This is the worst possible strategy. When you default on everything simultaneously, every funder is competing to be the first one to freeze your account, file a judgment, and intercept your receivables. You create a race to the courthouse. And you lose.

The smarter approach is staged. You stop paying one, deal with the fallout from that one, negotiate or settle it, and then move to the next. This keeps your bank account open, your cash flow intact (as much as possible), and gives you negotiating leverage because you're still paying the others.

The other mistake is thinking you can just disappear. Close the account, open a new one, route everything through your cousin's LLC. Funders have seen every version of this. They'll find the new account. They'll trace the deposits. And now instead of a default, you've committed what looks like fraud, which eliminates any sympathy a judge might have had for you.

Some MCAs were structured in ways that might make them unenforceable, or reclassifiable as loans. If your MCA has a fixed payment schedule (not a true percentage of receivables), a reconciliation clause that was never honored, or a repayment structure that doesn't actually fluctuate with your revenue — that agreement might not be a purchase of future receivables at all. It might be a loan. And if it's a loan, it might be a usurious one, which changes everything about your legal position.

This doesn't mean you should assume your MCA is unenforceable. But it means that before you decide which one to default on, you should have someone who actually understands MCA law look at the agreements. Not your cousin who's a real estate attorney. Someone who deals with this specifically. Because the agreement you think is your weakest one might actually be the one with the strongest defense.