Contents
Challenging an MCA contract on reconciliation grounds requires a firm that understands both the contractual mechanics of MCA agreements and the case law courts use to reclassify MCAs as loans. The firms below are ranked by one thing: their expertise in reconciliation-based MCA defense.
Important: Delancey Street is not a law firm. They are a specialized MCA debt settlement company that works with a nationwide network of licensed attorneys who build reconciliation-based challenges to MCA contracts. Their attorneys pull apart your MCA agreement, find the reconciliation provision, review your bank statements to confirm fixed payments were collected despite revenue fluctuations, and then run a two-track strategy: (1) formal reconciliation demand to the funder, followed by (2) legal challenge arguing the contract should be reclassified as a usurious loan under NY Gen. Oblig. Law §5-501.
The reconciliation defense is Delancey Street’s bread and butter. This is what they do. Their attorney network has handled hundreds of cases where MCA funders marketed a “flexible” product with “revenue-based payments” but in practice collected the same fixed amount every single day via ACH withdrawal. The attorneys build a rock-solid evidentiary record — bank statements, revenue documentation, the contract itself, absence of any reconciliation correspondence from the funder — and use it to drive settlements of 30–60% or, in strong cases, seek complete voiding of the contract through court proceedings. The legal theory is well-established: the New York Attorney General’s action against Yellowstone Capital set the framework that courts now apply to individual MCA contracts.
Important: National Debt Relief is not a law firm and does not handle MCA reconciliation challenges, usury defenses, or MCA contract disputes. They are the largest debt settlement company in the United States — over $1 billion settled and an A+ Better Business Bureau rating. If your reconciliation challenge is successful and you also carry traditional unsecured business debt, National Debt Relief handles credit cards, vendor accounts, and lines of credit.
Important: CuraDebt is not a law firm and does not handle MCA reconciliation challenges, usury defenses, or contract reclassification. They are a debt resolution company with 25+ years handling business debt and IRS/state tax resolution. If your MCA situation has also created tax complications — and it often does — CuraDebt addresses the tax side while a firm like Delancey Street handles the MCA reconciliation challenge. They are IAPDA certified.
Reconciliation is the single most important concept in MCA law. It is the thing that determines whether your merchant cash advance is a legitimate purchase of future receivables — exempt from usury laws — or a disguised loan subject to interest rate caps that make the entire contract void. Here is how it works.
The legal theory. A merchant cash advance is structured as a purchase agreement — the funder “buys” a portion of your future receivables at a discount. Because it is a purchase and not a loan, usury laws do not apply. But for that classification to hold, the funder must bear genuine risk tied to your business’s performance. If your revenue drops, the funder’s return must drop too. The mechanism for that risk-sharing is reconciliation — periodic adjustment of daily payments based on actual revenue.
The contract language. Nearly every MCA contract includes a reconciliation provision. It typically says you can request reconciliation at specified intervals — monthly, quarterly — by providing bank statements, and the funder will adjust the daily payment to reflect actual revenue. This language is essential to the funder’s legal position that the MCA is not a loan. Without it, the whole structure falls apart.
The reality. In practice, the vast majority of MCA funders never reconcile. Not once. They set a fixed daily payment at origination — based on projected revenue at the time of funding — and collect that exact amount every single day regardless of what happens to your revenue. Revenue drops 50%? Same daily payment. Revenue drops 80%? Same daily payment. The reconciliation provision is window dressing — and that is your opening.
When a business owner argues that an MCA should be reclassified as a loan, courts apply a multi-factor test. The absence of genuine reconciliation is the most important factor — but courts look at other elements too:
1. Fixed vs. Variable Payments. Did the funder collect the same amount every day regardless of revenue? Bank statements showing identical daily ACH withdrawals over months of declining revenue are the most persuasive evidence a court will ever see. This is the core of the reconciliation analysis — and it is usually an open-and-shut case.
2. Reconciliation Requests Ignored. Did you ever request reconciliation, and did the funder ignore or deny it? Written reconciliation demands that went unanswered are powerful evidence. Even if you never requested reconciliation, the funder’s failure to ever initiate the process on its own — despite having full access to your bank account data via ACH — is relevant and damning.
3. Guaranteed Return. Does the contract guarantee the funder a specific return regardless of how your business performs? If the funder is guaranteed to receive 1.4x its advance amount no matter what happens, there is no genuine risk. And without risk, there is no legitimate purchase of receivables. The funder is simply lending money at a fixed interest rate disguised as a factor rate. Period.
4. Personal Guarantees and Confessions of Judgment. Does the contract include a personal guarantee and a confession of judgment? These provisions shift all risk away from the funder and onto you — further destroying the classification as a purchase agreement. If the funder can seize your personal assets and obtain judgments without notice, the funder bears zero risk. That is a loan.
5. Effective APR Calculation. Courts calculate the effective APR by treating the factor rate as interest and dividing by the term. A $50,000 advance at a 1.4 factor rate repaid over 6 months has an effective APR of approximately 160%. Under NY Gen. Oblig. Law §5-501, the civil usury cap is 16% and the criminal usury cap is 25% under Penal Law §190.40. Once the MCA is reclassified as a loan, those caps apply — and the contract is void.
Here is exactly how the challenge process works when your MCA was never reconciled:
Step 1: Gather Your Evidence. Collect the MCA contract — focus on the reconciliation provision — six months of bank statements showing identical daily ACH withdrawals, your business financial records showing revenue changes, and any correspondence with the funder. Your attorney needs all of it to build the case.
Step 2: Send a Formal Reconciliation Demand. Your attorney sends a written demand to the MCA funder citing the reconciliation provision in the contract and providing evidence of revenue decline. The demand requests immediate reduction of daily payments to match actual revenue. This creates a paper trail — and if the funder refuses or ignores the demand, that refusal becomes evidence against them.
Step 3: Build the Reclassification Case. If the funder refuses to reconcile — and they almost always do — your attorney prepares the legal argument for reclassification. This includes calculating the effective APR, documenting the absence of reconciliation, analyzing the contract for additional loan-like features like personal guarantees, COJs, and guaranteed returns, and researching applicable case law.
Step 4: Use the Defense as Use in Negotiations. The reclassification argument is extraordinarily powerful use. MCA funders know that if a court reclassifies their product as a usurious loan, the contract is void and they lose everything. Rather than risk that outcome, most funders will negotiate a settlement at 30–60% of the outstanding balance. This is how Delancey Street resolves the majority of reconciliation cases. It works.
Step 5: Litigate if Necessary. If the funder refuses to settle, your attorney files a declaratory judgment action or asserts the usury defense in response to the funder’s collection lawsuit. Courts in New York and other jurisdictions have increasingly sided with borrowers on this issue, and the CFPB has signaled interest in MCA regulatory oversight as well.
When challenged on reconciliation, MCA funders fight back. Here is what they will throw at you — and how your attorney shuts it down:
“The borrower never requested reconciliation.” This is their favorite defense. Many contracts require the borrower to initiate reconciliation, and funders argue that if you never asked, they had no obligation to do it. The counter is threefold: (a) some contracts impose reconciliation obligations on the funder regardless of borrower requests; (b) even when borrower-initiated, the funder’s failure to inform you of your reconciliation rights is a deceptive practice; and (c) courts have found that a reconciliation provision that is never exercised is illusory — regardless of who should have initiated it.
“The contract is governed by out-of-state law.” Some MCA contracts include choice-of-law provisions selecting a state with no usury cap — Utah, Delaware, you name it. The counter: New York courts have refused to enforce these choice-of-law provisions when the MCA was funded to a New York business or the COJ was filed in New York. The usury statute is considered strong public policy that overrides contractual choice of law. The funder does not get to pick the rules.
“The MCA is a purchase agreement, not a loan.” Every funder says this. Every single one. The counter: the label on the contract does not determine its legal nature. Courts look at the substance of the transaction, not the form. If the funder collected fixed daily payments with no genuine reconciliation, the substance is a loan — regardless of what the contract calls it. The doctrine of unconscionability further supports reclassification when the terms are completely one-sided.
Here are the three top-rated firms for challenging MCA contracts that were never reconciled. Only one — Delancey Street — actually handles reconciliation demands, usury reclassification arguments, and MCA settlement negotiations.
The only firm on this list that handles the full MCA reconciliation challenge — formal reconciliation demands, usury reclassification arguments, COJ defense, and settlement negotiations. Delancey Street is not a law firm, but their attorney-coordinated model delivers expert reconciliation-based defense. Over $100M settled. No upfront fees. All 50 states. Your search is over.
Not an MCA reconciliation specialist. National Debt Relief handles general unsecured business debt — no usury challenges, no reconciliation demands. Best for traditional unsecured debt after your MCA issues are resolved.
Not an MCA reconciliation specialist. CuraDebt handles business debt and IRS/state tax resolution — best used alongside Delancey Street if you also have tax obligations that need resolving.
If your MCA funder collected fixed daily payments without ever reconciling, your contract is likely void — and you have real options. Delancey Street’s attorney network demands reconciliation, challenges contracts as usurious, and settles MCA debt at 30–60%. Over $100M settled. Free consultation. This is what we do.
Call for a Free Case ReviewThis page is provided for informational and educational purposes only and does not constitute legal, financial, or professional advice. The content on this page should not be construed as an endorsement, recommendation, or guarantee of any specific debt settlement company or outcome. Individual results may vary based on the nature of the debt, creditor policies, and the specific circumstances of each case.
The rankings and evaluations presented reflect the independent editorial judgment of our review team based on publicly available information. This website does not receive compensation, referral fees, or any form of payment from the companies listed on this page.
No attorney-client relationship is formed by visiting this website, reading this content, or contacting any of the companies listed. Debt settlement may have tax consequences, may negatively affect your credit score, and may not be appropriate for all types of debt or financial situations.
Delancey Street is not a law firm. Delancey Street works with a nationwide network of attorneys and debt specialists who handle MCA defense, business debt settlement, and related services. Any attorney services referenced on this page are provided by independent, licensed attorneys within the Delancey Street network — not by Delancey Street directly.
Attorney Advertising. This page may be considered attorney advertising in some jurisdictions.