Debt Settlement or Waiting: Six Questions for a 24 Month Cost Comparison

Waiting has no reliable price until the contract, collection posture, and available cash have been examined. A settlement quote supplies a proposed payment; doing nothing leaves the business exposed to obligations and proceedings whose timing may remain uncertain.

A twenty four month comparison can help an owner see the difference. It should be built from actual documents and stated assumptions, with uncertain costs left visible rather than replaced by invented savings figures.

1. Establish the Starting Balance

Obtain the creditor's account history and compare it with bank records. Identify principal or purchased amount, credited payments, fees, and any disputed entries. The comparison cannot be useful if the settlement percentage uses a balance the business has never verified.

Record which amounts are agreed and which require review. A disputed charge should not vanish from the forecast, but it should not be treated as established merely because it appears in a demand.

The existing agreement controls the payment structure. Some obligations have a set total while other charges or default provisions require separate examination. Do not assume that every MCA balance grows through the same interest formula during a period of nonpayment.

2. Build the Settlement Column From Written Terms

List the amount offered, provider charges, legal expenses where applicable, and any cost of financing the payment. Show the dates on which funds leave the business, including a final installment that may be larger than the earlier ones.

Delancey Street can assess an MCA settlement proposal against the business's finances. It is a settlement company rather than a law firm; independent counsel evaluates legal rights and any pending proceeding.

Ask the provider to ensure that the quoted cost distinguishes its charges from payments to the creditor. Counsel should ensure that the release and treatment of guarantees, collateral, or litigation match the intended resolution.

The proposal also needs a failure scenario. What happens if a customer pays late, the business misses an installment, or expected financing does not close? A comparison based only on successful performance can conceal the most expensive term in the agreement.

3. Describe What Waiting Actually Means

Doing nothing can mean continuing contractual payments, missing payments without negotiation, or failing to respond to a lawsuit. These choices do not have the same consequences and should not occupy a single column labeled wait.

Contractual Obligations

Show payments and charges supported by the agreement, with disputed enforceability questions identified for counsel. Do not project a generic penalty percentage across all accounts. A demand may include amounts the owner has a basis to contest.

The business should also identify operating effects that can be documented, such as funds unavailable because of an actual restriction. Avoid adding speculative lost revenue merely to make settlement look preferable.

Legal Process

A pending case requires its own response. New York CPLR 3012 illustrates procedural rules governing pleadings and extensions. A financial forecast does not extend a deadline or establish that the creditor will wait for the full comparison period.

Obtain counsel's proposed scope and costs rather than assigning a fictional litigation budget. The next stage may require work even if the parties later settle. Record the estimate, its assumptions, and the circumstances that would change it.

Judgment Interest

New York CPLR 5004 provides a general nine percent annual interest rule except where another statute provides otherwise, with a different rule for qualifying consumer debts against natural persons. A business MCA obligation should not be treated as consumer debt merely because an individual guaranteed it.

That statute is not a formula for every prelitigation MCA balance. Counsel should identify whether a judgment exists and which interest rule applies before the forecast includes an amount.

After a judgment, enforcement measures can create practical costs beyond interest, but the forecast should identify actual process before assigning an amount. A threatened restraint and a bank account already restricted are different facts. Obtain the papers and determine what relief is available rather than treating every collection warning as a completed event.

The owner should also distinguish legal fees already incurred from work that may be needed later. A written estimate can identify phases and assumptions without promising a final figure. This allows the comparison to show a range where uncertainty is real, while keeping known payment obligations separate. The result is more useful than a single total that conceals how it was constructed.

4. Use a Timeline Without Predicting the Creditor's Calendar

Divide the chosen period into practical budget intervals and enter known obligations on their actual dates. Mark possible events, such as a hearing or proposed sale, according to their status rather than treating them as guaranteed.

The creditor may act before the owner expects, or negotiations may continue longer than planned. No evidence here establishes that a particular MCA funder files suit or restrains an account on a fixed day after default.

Maintain separate versions for an accepted settlement, continued scheduled performance, and a disputed account requiring legal action. The business can compare the cash remaining in each scenario without pretending that the uncertain events have already occurred.

Revisit the comparison when a proposal changes or counsel resolves an important issue. The point of a longer horizon is to expose later obligations, not to make the first forecast permanent.

5. Record the Assumptions

Note the source of each balance, expense, and expected receipt. Distinguish estimates from confirmed amounts.

Keep the settlement proposal and legal advice available when updating the figures. Do not replace a disputed assumption with a more reassuring one without support.

6. Compare What Remains After the Payments

The lower cash outlay is not the only relevant result. Determine which claims are released, what collateral remains subject to an interest, and whether a personal obligation survives.

A first discussion with Delancey Street can assess the settlement side of the comparison while counsel addresses the legal exposure of waiting. The owner should understand the effect of each course on the business's ability to operate and meet essential expenses.

There may be reasons to contest the claim or decline an unaffordable proposal. Those decisions should follow review of the documents rather than an assumption that silence is free or that any discount is worth accepting.

A useful two year forecast makes uncertainty visible. It shows what can be calculated, what remains contingent, and which decision must occur before the next obligation becomes due.