Honolulu Business Debt Settlement and Merchant Cash Advance Lawyers
If you own a small business in Honolulu and are struggling with debt, you may be wondering what your options are. Debt settlement and merchant cash advances can provide relief, but the legal intricacies involved make working with a lawyer advisable. At Delancey Street, our attorneys can help business owners explore these solutions.
An Overview of Business Debt Settlement
Debt settlement, also called debt relief or debt negotiation, is the process of negotiating with creditors to pay off debts for less than what is owed. This can be an attractive option for business owners facing high interest rates and falling behind on payments.Here’s a quick rundown of how business debt settlement works:
- A business owner works with a debt settlement company like Delancey Street. We take on the negotiation with creditors.
- The business makes monthly payments into an account. Once enough funds accumulate to make a satisfactory offer, we negotiate with the creditor.
- If accepted, the creditor agrees to forgive a percentage of the debt, allowing the business to pay off their obligation at a reduced amount.
On average, enrolled debts get reduced by 40-60% through settlement. This can free up significant cash flow for small businesses to reinvest in operations and growth.
Why Work With a Business Debt Settlement Lawyer
While debt settlement can provide substantial savings, business owners need to understand the legal implications involved. This is where working with an attorney experienced in debt relief comes in handy.Some key reasons to consult a lawyer on settlement include:
- Navigating complex regulations – Debt settlement falls under regulations like the Fair Debt Collection Practices Act and the Telemarketing Sales Rule. Violations can lead to lawsuits or fines.
- Avoiding credit score damage – Settling debt for less than owed can severely hurt a business credit score if not done properly. An attorney can help minimize score impacts.
- Preventing tax headaches – Without strategic tax planning, cancelled debt through settlement can get counted as taxable income, creating IRS issues.
- Negotiating effectively – Attorneys have the legal expertise to negotiate optimal settlements, make sure agreements are binding, and ensure creditors act lawfully.
- Enforcing creditor violations – If a creditor harasses the business or breaks laws during settlement, a lawyer can compel compliance or file suit for damages.
Essentially, lawyers serve to protect the legal interests of small businesses seeking debt relief. This results in maximized savings and minimized risks.
Merchant Cash Advances: An Alternative to Debt Settlement
Another option that struggling Honolulu business owners should be aware of is merchant cash advances (MCAs). MCAs provide an upfront lump sum of capital in exchange for a percentage of future credit card and debit card sales.Here are some key aspects of merchant cash advances:
- Fast approval and funding – Because MCAs focus on future sales versus credit scores, approval decisions and funding can happen in as little as 24-48 hours. This makes them a lifeline for cash-strapped businesses.
- No fixed repayment schedules – There are no set monthly repayment amounts with an MCA. Instead, the business remits a fixed percentage of each day’s credit/debit card sales until the full advanced amount gets repaid. This structure is more flexible than bank loans if sales fluctuate seasonally.
- Higher cost of capital – The main downside of MCAs is that their cost of financing runs higher than conventional loans, with annualized rates typically ranging from 30-60%.
For some businesses, however, the quick access to working capital an MCA provides can justify utilizing one. And the flexible “pay-as-you-go” structure helps cash flow management during slower sales periods.
Working With Legal Counsel on Merchant Cash Advances
As with debt settlement, there are good reasons to have a lawyer review a merchant cash advance agreement before signing. Some key legal considerations include:
- Fee structures – MCA companies don’t all use the same fee models. An attorney can help negotiate favorable rates and terms.
- Compliance issues – MCAs fall under truth-in-lending and usury laws. Experienced legal counsel makes sure agreements comply on both fronts.
- Tax implications – Certain MCA fee structures can create substantial tax deductions for businesses. A lawyer structures the optimal agreement for tax purposes.
- Protections for non-payment – MCA contracts contain protections for the funder if the business can’t make the contracted repayments. Counsel can help minimize lender recourses.
- Exit strategy planning – Attorneys help put together plans for paying off MCAs within a reasonable timeframe so they don’t indefinitely siphon business revenues.
Why Work With Delancey Street for Debt Relief and MCAs
Here at Delancey Street, our dedicated team of attorneys has extensive experience helping small business owners across all industries weigh the pros and cons of debt relief options like settlement and merchant cash advances.We take an empathetic approach and tailor solutions to each client’s unique situation. And we offer complimentary consultations to explore whether debt settlement, an MCA, or potential alternatives make the most financial sense.If you choose to move forward with our legal services, Delancey Street assigns an expert attorney to handle negotiations and legal filings on your behalf from start to finish. We don’t hand clients off to different departments or outsourced teams. This ensures seamless service and maximum legal protection.To learn more or schedule a consultation with a Delancey Street small business debt relief attorney, don’t hesitate to give us a call or request a case review online. We’re here to help provide a path to financial freedom and healthy money management.
Frequently Asked Questions
Still have some questions about business debt relief and legal considerations? Here are answers to some of the most common queries we receive.
**What types of business debt can be settled?**
Debt settlement works for nearly all unsecured business debts – this includes credit cards, vendor accounts, lines of credit, past-due lease or utility bills, outstanding invoices, and business loans or notes that lack collateral assets attached.
**What happens if I miss settlement payments?**
This depends on the specific agreement terms, but typically if payments aren’t made as scheduled, the creditor can opt out of the negotiated settlement deal. Any funds in your settlement account get returned, and the original debt gets restored minus payments made to that point.
