Omaha MCA Debt Relief Lawyers: 5 Ways to Test a Proposed Resolution

Five Things to Test Before You Sign

If you are considering a merchant cash advance settlement offer, there are five things to test before you sign. What, exactly, is released and who - don’t forget about guarantors - whether you can actually pay the agreed figure every time it’s due and whether daily withdrawals actually stop, how any lawsuit or judgment gets closed out, whether any Uniform Commercial Code filings or customer notices are being cleaned up, and what the tax consequences are. A settlement is not the same thing as new financing, and a lower monthly payment doesn’t mean a lower total payment, either.

There’s no single percentage to start with for an MCA settlement. It all depends on the paperwork, payment history, what defenses the business can mount, where the funder is at with collections or litigation, and what you can realistically pay every time you have to write the check. Different merchants will get different results because their circumstances will vary, and, usually, if you have multiple MCA companies, you need separate agreements with each one. And look at all the funders at once.

As for defenses, counting on Nebraska’s 16 percent usury cap can get you in trouble, because it doesn’t cover every company. It’s the borrower’s organization that matters. Partnerships, corporations, trusts, and limited liability companies don’t get that cap, nor do individual guarantors of such loans.

The first test is who and what are released. Identify the MCA and the obligations, the claims, each funder, the company’s LLC or corporation, all guarantors, what survives, and effective dates for everything. You will also want your own personal guarantee named separately. See when the release takes effect, and if there’s no release until you pay everything, there is, in effect, no release until that last dollar’s cashed.

Why are you looking at a settlement, in the first place? Presumably because the payments already underway were too much for the business or got so it couldn’t make them every time they were due. It’s no point taking a settlement that just puts you back where you were, so the second test is: can the business realistically and reliably make every monthly or weekly payment on time. You need to look for cure periods in the settlement documents. Check how a missed settlement payment gets treated. A late or missed settlement payment can open the door to claiming a larger balance. Don’t expect signing alone to end the daily debits. You want written confirmation how existing ACH payments will end and be replaced by settlement payments, the effective date, and who gets instructed. You can easily go back to juggling your accounts again otherwise.

The third test is handling any lawsuit or judgment. Even if you agree in principle and are exchanging terms, the MCA company can keep pushing a court for an answer from you until you file something formally, so nothing you say to the funder’s representative will pause that. So look at the dismissal you expect, whether it comes before or after you pay everything, who files it, and what payment gets that started. Sometimes they get filed after the final settlement payment clears. New York state has barred new filings of its confession of judgment forms from August 30, 2019 if the business didn’t live there when it signed or when it was filed. You can’t file one there on a merchant from Omaha, for instance, no matter what it says.

Keep the court papers, the envelope, and all contents safe. Note how they arrived and when, then check the deadline in the papers themselves. Calling the funder or a settlement company won’t change that deadline.

The fourth test is identifying UCC filings, notifications to processors, and notices to customers. What notices get mailed, who files a UCC termination, when it happens, whether notices get retrieved, and in what order. In Nebraska, once the obligation is paid in full, the funder has to send or file its termination within 20 days of your signed demand. So you want to know whether it happens after you’ve made your last payment or before, how it gets filed, and what remains on file.

The last test is what this settlement’s going to mean for your income tax returns. Ask a tax professional whether any forgiven amounts have tax consequences for the business or owners. If you have a canceled debt, you’ll have to enter it on your return as part of your income, even if you don’t have a 1099-C, if you have no exclusions, such as insolvency by using Form 982.

Who’s Suggesting It

Next, see who’s suggesting it to you. The offer can come from a debt negotiation company or a law firm that also does some negotiation work as well. After you enroll, what payments and fees cover what? Also, anything having to do with a payment agreement doesn’t automatically include a court defense when the case gets filed. In Nebraska, you can verify an attorney’s license through the Nebraska Supreme Court’s public attorney search. If it’s a grievance, the Counsel for Discipline handles that. A contingent fee must be in writing, spell out the percentage, and be signed by the client.

When you look at a proposal, get all the file: the MCA agreement, all guarantees, payment records, the balance claimed, any default notices and payment demands, your bank statements, court papers. Find out how what you’ve already paid compares to the balance they say is due. And get everything from every MCA that’s involved.

Don’t let anyone tell you to stop making payments or cancel the ACH transfers on your own, since many agreements treat stopping ACH debits as default. And you don’t want to launch the process without consulting a lawyer first; it’s all too easy to make a mistake that brings on higher fees and guarantor claims and lawsuits.

If no offer’s possible because the business can’t afford any payment plan, look into Subchapter V bankruptcy. You’ll need total debts - not counting insiders or affiliates - that are noncontingent and liquidated and add up to $3,424,000 or less, the limit since April 1, 2025.

If you do settle, your signature alone is not the final step. Make sure you hang onto the signed settlement itself, proof of every payment, and written confirmation of every followup step after that.