Indianapolis Business Debt Settlement and Merchant Cash Advance Lawyers
If you run a small business in Indianapolis and are struggling with debt, you may be considering business debt settlement or taking out a merchant cash advance loan. However, these options come with legal implications that business owners should understand before moving forward.
At Delancey Street, our team of attorneys and financial experts can provide guidance on debt relief options for Indianapolis businesses. We take an empathetic, human approach to helping business owners get out of debt and achieve financial freedom.
How Business Debt Settlement Works
Business debt settlement, also called business debt relief or negotiation, involves working with creditors to reduce the amount a business owes. A debt settlement company or attorney negotiates with creditors on the business’s behalf to settle accounts for less than the full balance.
For example, if a business owes $100,000 across multiple credit accounts, a debt settlement firm may be able to negotiate this down to $60,000 or less. The business then pays the reduced settlement amount as full satisfaction of the debts. Some key things to know:
- Settling debt for less than owed may have tax consequences. The $40,000 difference in our example would generally count as taxable income.
- Settling debt typically requires stopping payments and allowing accounts to become delinquent or go into default. This can hurt business credit scores.
- Not all creditors will agree to settle, and those who do often require lump-sum payments. Coming up with settlement funds can present another challenge for struggling businesses.
So while business debt settlement may seem like an attractive option, the legal and financial impacts make it tricky. An attorney experienced with debt relief can advise whether settlement aligns with your goals and ability to pay.
What is a Merchant Cash Advance?
A merchant cash advance (MCA) provides quick financing by purchasing a portion of a business’s future credit card sales. An MCA company advances a lump sum, which the business then repays by allowing the MCA company to collect a fixed percentage of daily credit card receipts.
For example, an MCA provider may advance $50,000 to a business and then collect 15% of daily credit card sales until they receive $75,000—the original $50,000 plus a $25,000 fee.Some key aspects around MCA loans:
- Payments are taken automatically from credit card settlements, daily or weekly, until repaid. This ensures repayment but can make cash flow planning difficult.
- MCA fees often equate to 50-200% APR when calculated as interest. This makes the actual cost of financing much higher than with a standard small business loan.
- Standard loan protections don’t apply. MCA repayments aren’t based on terms like rates and payment periods but rather daily credit card revenue.
- Acceleration clauses allow the MCA company to demand full repayment if they don’t receive consistent payments. This can leave merchants owing large balloon payments.
While MCAs provide fast financing, the high costs and risk of ending up owing a lump-sum demand payment often make them a last resort for small businesses. Consulting an attorney can help you understand the legal implications before using business credit cards to secure financing.
Working with a Business Debt Attorney
As you can see, business debt relief options like settlement and merchant cash advances come with extensive legal considerations. Understanding the implications for your specific situation requires working with an attorney experienced in these areas.
At Delancey Street, our legal team partners with certified debt specialists to provide Indianapolis businesses customized debt relief services. We take time to understand your unique situation and goals so we can advise solutions that make the most financial and legal sense.
Our attorneys can help with activities like:
- Reviewing current debts and contracts to identify all potential liabilities
- Assessing whether your accounts may be eligible for reduced settlement
- Negotiating with creditors and MCA providers on your behalf
- Ensuring any settlements or agreements align with state and federal law, including tax codes
- Creating customized debt repayment plans that ease cash flow constraints
Throughout the process, you’ll work with a dedicated case expert to ensure clear communication and high-quality service. And our flexible fee structures aim to provide access to legal expertise regardless of your financial situation.
Don’t Navigate Business Debt Alone
If you feel overwhelmed by Indianapolis business debt, know that help is available. At Delancey Street, our legal and financial experts approach each client with empathy, compassion and a commitment to understanding their unique situation.
We firmly believe struggling with business debt should not define who you are as a merchant, entrepreneur or leader. And our high-touch services focus on more than just debt elimination—we want to see you achieve lasting financial freedom and empowerment.
