Dallas MCA Defense Lawyers Business Debt Relief

Dallas MCA Defense Lawyers Business Debt Relief

Merchant cash advances (MCAs) can provide much-needed capital for small businesses. However, some MCA companies engage in predatory lending practices that can leave business owners trapped in a cycle of debt. This is where experienced Dallas MCA defense lawyers can help.

How MCAs Work

MCAs are a form of business financing where a company provides a lump sum payment to a business in exchange for a percentage of future credit card and/or debit card sales. This is different from a traditional small business loan in a few key ways:

  • There is no set repayment schedule. Instead, the MCA company takes a fixed percentage of daily credit/debit card sales from the business’s merchant account until the advance is repaid in full plus fees and interest.
  • Approval decisions are made quickly, often in 24-48 hours, allowing businesses fast access to capital. However, underwriting standards tend to be light.
  • Costs are very high compared to other financing options. MCA companies often do not disclose an APR, but the equivalent can exceed 100% APR.

This structure allows businesses with poorer credit or financials to access financing where traditional lenders would likely decline. However, it also creates an environment ripe for abuse without appropriate guardrails.

Predatory Lending Practices

While certainly not all MCA funders engage in unethical behavior, many Dallas business owners report predatory actions from their MCA companies. Some common issues include:

  • Deceptive marketing promising “no debt” when MCA repayments include very high effective interest rates
  • Misrepresenting or not adequately explaining rates, terms, conditions, and consequences of default
  • Aggressive daily debits that extract more revenue than reasonably affordable for the business
  • Locking businesses into extremely long repayment terms with no early repayment option
  • Reselling debt to third-party collectors who harass business owners
  • Freezing merchant accounts or forcing business owners into bankruptcy over relatively small balances

These practices indicate systemic problems with certain segments of the MCA industry taking advantage of small business owners in desperate situations.

How Can a Dallas MCA Defense Attorney Help?

Having an experienced attorney on your side levels the playing field when disputing predatory MCA tactics. An attorney can assist with:

  • Vetting MCA Offers – Review proposed MCA contracts to identify potential red flags or predatory terms before signing.
  • Debt Harassment – Issue cease and desist notices to MCA companies and collectors to stop harassment, threats, and illegal collection practices.
  • Debt Validation – Require debt collectors to provide complete payment histories and formally validate debts prior to making any payments.
  • Improper Account Freezes – Legally require MCA companies to unfreeze merchant accounts and restore business operations.
  • Unfair Contract Terms – Identify and dispute legally unenforceable or unconscionable provisions in MCA contracts.
  • Usury Violations – Prove where MCA companies have charged usurious rates above state limits and seek contract cancellations.
  • Debt Settlements – Negotiate reduced payoff amounts and affordable long-term payment plans.
  • Bankruptcy Protection – In extreme cases, file Chapter 7 or Chapter 11 to discharge all or part of MCA debts and stop collections.

Having expert legal advice changes the game when defending against MCA overreach. The right attorney has the knowledge and resources to attack predatory contracts, stop harassment from collectors, and craft settlements that business owners can realistically afford.

Key Texas MCA Defense Laws

Texas has specific laws governing MCA transactions that aim to protect small business owners from abuse while facilitating access to capital. Below are some notable regulations that experienced Dallas MCA defense lawyers utilize:

Texas Credit Services Organizations Act

  • Requires MCA brokers to register as Credit Access Businesses (CABs)
  • Prohibits misleading statements about rates, terms, and benefits
  • Imposes penalties for violations including contract cancellations and damages

Texas Deceptive Trade Practices Consumer Protection Act

  • Prohibits false, deceptive, or misleading acts in the conduct of trade or commerce
  • Allows consumers to sue for economic damages, mental anguish, treble damages, court costs and attorney fees

Texas Finance Code on Authorized Rates

  • Rate caps limiting the maximum interest rates lenders can charge
  • Provides remedies like contract cancellations, debt forgiveness, and damages for usury violations

Texas Debt Collection Practices Act

  • Outlaws harassment, threats, deception, and other abuses by debt collectors
  • Debt collectors who violate the act can be sued for damages, attorney fees, and penalties

These regulations and others serve as tools for experienced attorneys to attack the root causes enabling predatory behavior. An attorney well-versed in Texas MCA laws can quickly spot violations and advise business owners on the best avenues for seeking justice.

Settlement Strategies

Ideally, an attorney can leverage Texas laws and legal precedents to get unfair MCA contracts ruled unenforceable. However, in many cases, settlement becomes the most practical path forward.When negotiating MCA settlements, key strategies attorneys use include:

  • Document Review – Thoroughly analyze the MCA contract to identify weaknesses for exploitation in settlement talks.
  • Validation Notices – Require debt collectors to formally validate and provide a complete payment history for the debt prior to settlements.
  • Affordability Assessment – Calculate a payment schedule the business can realistically afford without jeopardizing operations.
  • Good Faith Offers – Make reasonable settlement offers grounded in financial proof to show good faith efforts towards resolving disputes.
  • Going Concerns – Demonstrate the business is an ongoing entity and therefore has intrinsic settlement value versus outright bankruptcy.
  • Mutual Releases – Structure agreements so both parties waive all future claims and liability against each other.

The proficiency of the attorney makes a substantial impact in achieving fair settlements that offer a clean break from predatory MCA arrangements.

Finding the Best Dallas MCA Defense Attorney

As MCA horror stories mount, more attorneys are marketing themselves as MCA defense lawyers. However, business owners should carefully vet potential counsel to ensure competent representation. Warning signs of an underqualified attorney include:

  • No proven track record settling MCA disputes
  • Unable to articulate intricacies of MCA contractual terms
  • Does not specialize in commercial collections or creditor negotiations
  • Struggles to explain how they will leverage laws and regulations to your advantage

Conversely, indicators of expertise in vetting Dallas MCA defense lawyers include:

  • Years of experience negotiating, settling, and litigating MCA disputes
  • Clearly explains strengths and weaknesses of your case based on contract review
  • Demonstrates command of Texas statutes governing MCA transactions
  • Can provide client references who they helped defend against specific MCA funders

It also helps to understand an attorney’s settlement philosophy. Ethical lawyers will be upfront about realistic outcomes based on case merits rather than overpromising guaranteed contract cancellations or full debt forgiveness.

Delancey Street – Your Ally Against Abusive MCA Tactics

Delancey Street has extensive experience representing Texas business owners against various MCA funders and collectors over the past decade. Our dedicated team of attorneys and professionals take an ethical, compassionate approach in defending clients against crushing MCA debt.We offer free contract reviews, no-obligation case assessments, and entirely contingency-based fees. That means no upfront costs and we only get paid if money is saved.Our track record includes negotiating reduced settlements with prominent funders like Yellowstone Capital, EBF Partners, United Capital Source, Everest Business Funding, Queen Funding, and many others.We empower business owners with the information and support needed to stand up against abusive MCA tactics. Contact our office today for a free consultation with an attorney to discuss your situation. Call 212-210-1851 or visit our site https://www.delanceystreet.com for more information.

Frequently Asked Questions

What are some common signs I may be dealing with a predatory MCA company?

Red flags include extremely high rates, long repayment terms, single daily debits that extract more revenue than reasonably affordable, freezing your merchant account, threats when you fall behind on payments, immediately reselling debt without working with you on repayment options, and refusing to provide detailed payment histories when requested.

What MCA tactics are legally considered harassment in Texas?

Harassment prohibited under Texas law includes threats against your business or personal finances, contacting you repeatedly in a harassing manner, making false or misleading representations, and engaging in unfair or unconscionable collection methods.

Is it possible for an attorney to get an MCA contract ruled legally invalid in Texas?

Yes, if the attorney can prove violations of Texas laws regarding usury limits, credit access business regulations, or statutes prohibiting deceptive, misleading, or harassing conduct. Proving such violations can result in contracts being cancelled, debts forgiven, and monetary judgements awarded.

Can filing bankruptcy really discharge my MCA debt?

Potentially – an experienced attorney can analyze if your specific situation meets the criteria for discharging MCA debts in Chapter 7 or Chapter 11 bankruptcy. This includes assessing whether the MCA contract violates Texas usury laws or can be legally classified as a dischargable loan instead of a merchant cash advance.

What do you think?

What to read next