Michigan MCA Defense Lawyers Business Debt Relief

MCA Defense Lawyers Business Debt Settlement

Merchant cash advance (MCA) loans have become an increasingly popular way for small businesses to access quick financing. However, some MCA lenders engage in predatory practices that can leave business owners saddled with crushing debt. If you are struggling with MCA debt, working with an experienced business debt settlement lawyer can help you take control of the situation.

How MCA Loans Work

A merchant cash advance provides a business with a lump sum of capital in exchange for a percentage of future credit card sales. It is not technically considered a loan, so MCA companies can skirt consumer protection laws that regulate loan products.Here’s a quick rundown of how MCAs work:

  • No Credit Checks – MCA companies do not look at personal or business credit scores to approve financing. This allows many companies that would not qualify for a bank loan to get funding.
  • Quick Funding – Businesses can often access MCA funds in as little as 24-48 hours. The application process is simple and funding is fast.
  • Fixed Daily Payments – The business agrees to pay back a fixed amount from their credit card sales every day until the full MCA amount plus fees and interest is repaid. Payments are taken automatically as a percentage of daily batches.
  • Higher Costs – While fast and easy to obtain, MCAs can be extremely expensive financing options. Some companies charge effective interest rates over 200% APR when all fees are calculated.

Predatory MCA Lending Practices

While MCAs provide a valuable source of financing for some small businesses, many companies in this loosely regulated industry engage in predatory tactics:

  • Deceptive Marketing – MCA companies promote these as “no risk” financing options but do not adequately disclose the extremely high costs.
  • Overfunding – Some fund companies well beyond their ability to repay, setting them up for failure.
  • Aggressive Collections – Tactics like freezing bank accounts, contacting customers, and threatening lawsuits push struggling business owners into bankruptcy.

These practices trap owners in debt spirals where they end up paying exorbitant fees but make little progress paying down the principal balance.

Fighting Back Against MCA Companies

If you feel trapped in an abusive MCA agreement, working with an attorney experienced in MCA defense can help you regain control. There are a few strategies they can leverage:

Negotiating Settlements

An attorney can negotiate directly with the MCA company to settle your outstanding balance for less than you owe. This avoids potential legal action. Based on factors like violations of state laws and inability to repay, settlements of 40-60% of the full balance are possible.

Challenging MCA Agreements

In some cases, aspects of the MCA agreement may be legally challenged:

  • Usury Violations – If interest rates exceed state limits this can invalidate all interest owed.
  • Unconscionability – If terms are unfairly one-sided and prevent repayment, courts may void the agreement.
  • Deceptive Marketing – Predatory sales tactics may qualify borrowers for relief under consumer protection laws.

Recovering Owed Payments

If the MCA company took more from your accounts than you rightfully owed, an attorney can help recover those payments and damages. Violations of lending laws or unfair collections practices strengthen these claims.

The Debt Settlement Process

If you decide to move forward with legal action, here is an overview of what you can expect while working with a business debt settlement attorney:

1. Strategy Consultation

In your initial consultation, the attorney will conduct an in-depth review of your MCA agreement and finances. They will assess potential violations and determine the strongest legal strategies to reduce what you owe.Based on this review, they will put together a customized debt settlement strategy targeting your specific situation.

2. Negotiations

Your attorney will contact the MCA company directly and negotiate firmly but fairly to reach a reduced settlement. These negotiations rely on legal arguments but focus on finding a practical solution.Note: Once your attorney gets involved, collections activity like bank levies must cease. This provides immediate relief.

3. Settlement & Closure

With an agreement in place, you will pay the negotiated settlement amount through a structured repayment plan. Once repaid in full, this permanently closes out your MCA debt.Throughout this process your attorney ensures fair treatment and that the MCA company honors the agreement.

Why Work With a Business Attorney?

Navigating complex MCA debt on your own can be overwhelming and emotionally taxing. An experienced attorney levels the playing field. Benefits of legal representation include:

  • Immediate Relief – Collections pauses so you can focus on running your business.
  • Reduced Financial Burden – Settlements lower total repayment amounts.
  • Avoid Bankruptcy – Settlements provide an alternative to damaging bankruptcy filings.
  • Peace of Mind – Let your attorney handle negotiations so you can focus on your business.

About DeLancey Street

DeLancey Street‘s team of seasoned attorneys provide small business owners strategic guidance and vigorous legal advocacy. Our firm takes an aggressive yet balanced approach in standing up to predatory lenders.We have successfully achieved reduced settlements and recoveries for numerous clients trapped in abusive MCA agreements. Our priority is providing immediate relief so you can move forward with your business.

What do you think?

What to read next