Short answer: Most MCA funders sue within 14 to 45 days of default. Some move in under a week. A few will wait 60-90 days. But waiting is not the norm, and it’s not something you should plan around.
If you’re reading this because you just defaulted, or you’re about to, understand something. The MCA industry is not the bank. There is no collections department slowly working a 90 day delinquency cycle. There is no charge-off at 180 days. The funder’s lawyer is often on retainer, the complaint is often a template, and the courthouse they file in (almost always New York, almost always under a confession of judgment or a forum selection clause) is one they file in every single day.
They are built to sue fast. That is the business model.
What determines how fast they sue
Not every funder moves on the same timeline. The speed depends on a few things, and if you understand them, you can roughly predict where you sit.
- Who the funder is. The big, well-capitalized funders (you know the names) tend to move faster, because they have in-house legal, outside counsel on retainer, and a system. The smaller funders sometimes move slower, not because they’re nicer, but because they’re disorganized. Don’t mistake disorganization for mercy.
- How much you owe. A $40,000 balance gets sued faster than a $12,000 balance. The math is simple – the bigger the balance, the more it’s worth their time to file immediately. Smaller balances sometimes get sold to a debt buyer first, who then sues you instead.
- Whether you stacked. If you took a second or third MCA and the original funder finds out, the lawsuit timeline collapses. Stacking is the single fastest trigger for litigation. Some funders will file within 72 hours of confirming a stack.
- Whether you blocked the ACH. If you simply ran out of money, you’ll get a few days of collections calls first. If you actively blocked the debit, changed banks, or reversed payments — they treat that as fraud-adjacent behavior, and the lawsuit moves to the front of the line.
- Whether they have a Confession of Judgment. This used to be the fastest path of all. A COJ let the funder walk into a New York court, file the confession, and get a judgment in days, with no notice to you. New York banned them for out-of-state defendants in 2019, but if you signed an MCA before then, or if you’re a New York business, the COJ is still live. And it’s brutal.
The typical timeline, in the order it actually happens
- Day 1-3: ACH bounces. Funder retries it two or three times. Collections calls start, on your business line, your cell, the personal guarantor’s cell. Sometimes your spouse.
- Day 3-10: The acceleration letter goes out. The full balance is now due, plus default fees, plus attorney fees. Some funders skip the letter entirely and go straight to filing.
- Day 7-21: UCC notices get sent to your processor, your customers, your vendors. This is the lockbox phase. Cash flow gets choked.
- Day 14-45: The complaint gets filed. You’ll usually find out when you get served, or when your accounts get frozen — whichever comes first.
- Day 21-60: If they have (or had) a COJ, the judgment is already entered, and they’re moving on bank account restraints, levies, and subpoenas to your processor.
This is the median path. I have seen lawsuits filed on day 4. I have seen funders sit on a default for 90 days and then move all at once. The variance is real, but the direction is always the same.
Why some funders wait
When a funder waits 60 or 90 days, it’s almost never because they forgot about you. It’s usually one of three things:
- They’re trying to settle first. Litigation is expensive, even with a template complaint. If they think you’ll come to the table, they’ll let collections work for a few weeks before paying a lawyer.
- They’re stacking the file. Some funders deliberately wait, let the interest, default fees, and attorney fees pile up, then sue for a much bigger number. This is more common with the unsavory end of the market.
- They sold the debt. If your balance got sold to a debt buyer, the buyer’s timeline starts over. You might get a quiet 30-60 days, then a lawsuit from a name you’ve never heard of.
None of these are good news for you. They just shift when the lawsuit lands.
What “getting sued” actually looks like
Most MCA lawsuits are filed in New York, usually in Supreme Court for one of the five boroughs, even if you’ve never set foot in the state. Your MCA agreement has a forum selection clause that you signed, and that clause holds up.
Once filed, the funder’s lawyer will:
- Serve you (or attempt to serve you) at your business address, your home, or the personal guarantor’s home.
- Move for a preliminary injunction or a temporary restraining order to freeze your bank accounts. This can happen within days of filing, sometimes the same day.
- Subpoena your processor, your bank, and any third party that holds money for you.
- If they had a COJ — skip all of that, and go straight to enforcement.
By the time most business owners realize they’ve been sued, the bank account is already frozen. That’s not an accident. That’s the design.
What to do if you’ve defaulted and haven’t been sued yet
The window before they file is the only window where you have leverage. Once the complaint is in, the negotiation gets harder, the numbers get worse, and your options narrow.
- Don’t ignore the calls. Don’t take the calls either, necessarily — but know what’s being said. Voicemails, letters, and emails from the funder are the early warning system.
- Don’t take another MCA to pay the first one. This is the single most expensive mistake business owners make at this stage. It accelerates the lawsuit, it triggers the stacking clause on every other MCA you have, and it digs the hole twice as fast.
- Don’t move money around. Funders watch bank statements. Sudden transfers to personal accounts, to family members, to a new LLC — all of it shows up later in discovery, and all of it makes you look like you’re hiding assets.
- Get someone who does this for a living involved. Whether that’s us, an attorney, or another debt restructuring firm — the timeline is too short to figure this out yourself. By the time you’re researching it, the lawyer on the other side has already drafted the complaint.
