How to vet an MCA relief company before you sign anything

Somewhere between the second missed debit and the first default letter, your phone started ringing. Not once. Twenty times a week, from numbers in four area codes, all of them somehow knowing your business name and roughly what you owe.

You need help. You also need to pick correctly, on very little sleep, from a field where the good operators and the bad ones use the same vocabulary and buy the same lead lists.

This is a checklist for doing that. It is deliberately written so you can use it on anyone, including us.

Start with what the company actually is

Before any conversation about your debt, establish three facts.

The legal entity. Get the exact registered name, not the brand on the website. Search it in the Secretary of State database for the state where they claim to operate. You are looking at the formation date and whether the entity is in good standing. A company formed four months ago is not automatically bad, but it should change how much weight you give claims about long experience.

Whether they are a law firm. This is a binary fact, not a marketing position. A law firm is a firm of licensed attorneys and can appear in court for you. A debt settlement company is not and cannot. Both models can be legitimate. What matters is that they tell you plainly which one they are, and what happens if your matter turns into litigation.

A verifiable address and a person's name. A suite number that resolves to a mail drop, a website with no named people, and a phone tree with no direct line are not disqualifying on their own. Together they are.

Get the fee structure in writing before you discuss your file

Ask this early and ask it in dollars. A clear answer sounds like a stated percentage applied to a defined base, or a flat monthly amount for a stated term, plus whatever is or is not included.

Then ask the follow ups that reveal the shape of the deal:

• Percentage of what, exactly? The enrolled balance, the reduction achieved, or the amount you actually pay?
• When is it earned, and when is it collected?
• What happens to fees already paid if a funder refuses to negotiate?
• Is there a separate setup, administrative, or monthly maintenance charge?
• If a lawsuit is filed, is defense included, extra, or referred out?

A company that cannot answer those in plain numbers on a first call will not get clearer after you sign.

Understand where the federal rules do and do not reach

Much of the advice online about debt relief comes from the consumer world. The Federal Trade Commission's Telemarketing Sales Rule at 16 CFR 310 restricts what debt relief providers may claim and, at 16 CFR 310.4(a)(5), bars collecting fees before delivering results, with specific conditions. Those debt relief provisions are built around consumers and their unsecured debts.

Business to business commercial debt generally sits outside that particular rule. Several states also license debt adjusting or debt management, and those statutes frequently define the covered activity in consumer terms as well.

The practical takeaway is not that no rules apply. The FTC Act's prohibition on unfair and deceptive practices at 15 U.S.C. 45 reaches business to business conduct, state unfair and deceptive practices statutes often do too, and the FTC's Endorsement Guides at 16 CFR 255 govern how testimonials and results claims may be presented. The takeaway is that you should not assume a federal rule is doing your due diligence for you. Do it yourself.

Ten questions that separate operators from marketers

1. What is your read on my situation, and what would you need to see to give me a real answer?
2. Which of my advances do you think will negotiate, and which ones will not?
3. What is a realistic range of outcomes here, and what is the bad case?
4. How long does a file like mine usually take, start to finish?
5. What happens to my daily debits during the process?
6. What is my exposure under the personal guaranty I signed?
7. If a funder sues, who defends it and who pays for that?
8. Who is my actual point of contact, and how often will I hear from them?
9. What do you need from me each month?
10. What would make you turn this file down?

Question ten is the most useful one on the list. A firm with no criteria for declining a case is selling enrollment, not results.

What a good answer sounds like on the hard questions

Good answers include downside. You should hear about the possibility of litigation, the effect on the personal guaranty, the fact that a funder can refuse to negotiate at all, and the reality that outcomes depend on the specific funder, the balance, the contract, and your documented hardship.

Historical settlements in this industry have landed in a wide band, commonly discussed as 40 to 60 cents on the dollar across past negotiations. That is a description of what has happened in the past on some files, not a projection for yours, and anyone presenting a number as your outcome before reading your agreements is telling you something they cannot know.

You should also hear a clear no somewhere. No, we cannot make a funder negotiate. No, we cannot promise a timeline. No, we do not handle that part.

Read these clauses before you sign

• Scope. What services are included, and specifically whether litigation defense is.
• Fee earned language. When the fee is considered earned versus when it is collected.
• Authority. Who has authority to accept a settlement offer, you or them. It should be you, in writing, each time.
• Funds handling. If you are depositing money toward settlements, where is it held, who controls it, and what happens to it if you cancel.
• Cancellation. How you exit, what notice is required, and what you owe on the way out.
• Communications. Whether you are asked to route funder contact through them, and what you are still expected to do yourself.
• Arbitration and venue. Where a dispute with the relief company itself gets resolved.

Take the agreement home. A firm that will not let you read it overnight has told you what it thinks of your judgment.

Verify independently, in about ten minutes

Search the entity name in your state's business registry and in the registry of the state they claim as home. Search the FTC's press releases and your state attorney general's site for the name and for the names of the principals. Search the state UCC index. Search public court records for the entity as a party. Look at the Better Business Bureau file, and read the complaints rather than the letter grade.

None of this is conclusive by itself. A pattern across three of them usually is.

The last step

Write down your three finalists and the fee each one quoted, in dollars, next to what each one said would happen if you get sued. If one of them is vague in that column, the decision is easier than it felt an hour ago.

Then apply every question above to us as well. If we cannot answer them as directly as we are asking you to demand, you should keep looking.