MCA Defense Lawyers Provide Expert Guidance on Business Debt Relief

Getting behind on business debts can feel overwhelming and scary. Between merchant cash advances (MCAs), loans, lines of credit, and other financial obligations, it‘s easy for companies to accumulate more debt than they can reasonably manage. If you‘re struggling with business debt, know that you have options – and the expert MCA defense lawyers at Delancey Street are here to help.

How We Can Help With Your Business Debt Situation

Our legal team has extensive experience dealing with all types of business financing, including complex MCA and factoring arrangements. We’ve represented companies of all sizes that have gotten trapped in predatory contracts with rates and terms they didn‘t fully understand.We provide a free consultation to review your business finances in depth and gain clarity on exactly what debts you currently owe. From there, we can advise on the best path forward, whether that involves:

• Negotiating with lenders for better repayment terms
• Disputing the enforceability of a contract
• Defending against lawsuits and collection efforts
• Exploring bankruptcy and restructuring options
• Unwinding an MCA through litigation

The key is that our advice is tailored specifically to your unique situation after thoroughly analyzing your accounts and obligations. Too often, struggling businesses enter into agreements that seem “easy” without realizing the long-term consequences. Having an expert MCA lawyer on your side levels the playing field when dealing with predatory lenders.

Common High-Risk Lending Practices That Lead to Spiraling Debt

Many small business owners turn to alternative lending solutions because they offer quick access to capital without requiring traditional qualifications like good credit or consistent revenue. *However, this speed and convenience often masks the egregious rates and terms in the fine print.*Some of the most problematic industry-wide practices include:

• Deceptively High Interest Rates – MCA rates may exceed 100%+ APR when accounting for all fees over the repayment period.

• Overestimating Future Revenue – Lenders base offers on inflated sales projections, setting borrowers up to default.

• Misrepresenting Terms – Vague contract language obscures the true costs and obligations. Key info is often buried in fine print.
• Aggressive Collections – Lenders pursue repayment excessively via ACH withdrawals, merchant processor holds, threats, and litigation. Tactics border on harassment, even when borrowers make good faith efforts to pay.

While the upfront capital may provide temporary relief, the vicious debt cycles and domino effects down the road end up doing far more harm than good for small businesses. But unscrupulous lenders count on owners overlooking the pitfalls in moments of desperation.

Questionable Tactics Lenders Use to Trap Businesses in Debt

Based on our experience, predatory lenders employ some consistent strategies to mislead and pressure small business owners into unfavorable financing agreements:

• Masking True Rates – They avoid APR disclosures and instead focus on seemingly small daily repayment amounts. But additional fees accumulate rapidly.
• Presenting Offers as “Approvals” – Framing deals as “pre-approvals” makes desperate owners feel special, as if they’ve passed a rigorous vetting process. In reality, qualification criteria is loose and approval likely.

• Creating False Urgency – High-pressure sales tactics convince owners they’ll lose this singular lifeline opportunity unless they sign immediately. In fact, there are always alternative financing options.
• Obscuring Key Terms – Calculations presented upfront seem straightforward, but they neglect to mention that repayments are taken regardless of actual merchant processing volumes. So shortfalls accrue as debt.

• Downplaying Long-Term Obligations – The focus stays narrowly on how the immediate cash infusion can “save” a struggling business to distract from the years of high payments ahead.

While this type of financing plays an important role for some businesses, owners absolutely need to enter into any agreement with eyes wide open about potential hazards. Predatory contracts can quickly snowball, pulling otherwise viable companies into inescapable debt spirals.

Common Defenses Against Unfair Lending Practices

The good news is that businesses do have protections when lenders use questionable tactics to push unfavorable contracts. Our lawyers have successfully fought back against some of the largest MCA providers by spotlighting unethical business practices.Several legal arguments form the backbone of a strong defense:

• Failure to properly disclose terms – Certain state laws require transparency from alternative lenders about rates and repayment obligations. Hidden fees or confusing language may invalidate contracts.
• Misrepresenting qualifications – Overstating a company’s financial position or stability to extend credit can equate to fraud, especially if lenders neglect due diligence.

• Breach of good faith – All contracts carry an implied covenant of good faith, including upholding reasonable expectations about performance. Predatory collection activities may breach this duty.
• Unjust enrichment – When lenders receive unreasonable profits through misleading or exploitative tactics, courts may intervene by requiring contract changes or partial repayment refunds.

• Unconscionability – If agreements are grossly unfair or oppressive from the outset, their enforceability comes into question. Courts scrutinize if one party lacked meaningful choice or understanding.

Our lawyers specialize in constructing arguments along these lines tailored to individual cases. We thoroughly analyze each client’s experience to challenge contracts and account for any inappropriate lender behavior. While courts remain hesitant to restrict alternative financing products entirely, they have demonstrated a willingness to intervene and reign in predatory practices that take clear advantage of small business owners.