Milwaukee MCA Defense Lawyers Business Debt Relief

MCA Defense Lawyers Business Debt Settlement

Businesses can accumulate significant debt for a variety of reasons – economic downturns, cash flow issues, expansion costs, and more. When debts become unmanageable, business owners may turn to merchant cash advance (MCA) companies for quick capital. However, these loans often come with extremely high interest rates and aggressive collection tactics. If your business is struggling with MCA debt, working with defense lawyers specializing in debt settlement may help resolve your financial obligations.

Understanding Merchant Cash Advances

A merchant cash advance provides businesses with a lump sum of capital in exchange for a percentage of future sales. MCAs are not considered loans under legal definitions, so they can charge higher fees and rates without adhering to lending regulations.Here’s a quick overview of how merchant cash advances work:

  • Fast Approval – MCA companies promote easy and fast approvals, requiring minimal documentation compared to traditional business loans.
  • Expensive Financing – Advance amounts typically range from $5,000 to $500,000 with fees from 30% to 300% APR when calculated as interest rates.
  • Daily Repayments – MCAs extract repayments daily or weekly as a percentage of credit card and debit card sales, typically ranging from 5% to 20% of volume.
  • Harsh Collections – MCA companies can aggressively pursue repayments, charging late fees and even attempting to freeze bank accounts or sue business owners.

While MCAs provide fast access to capital, the extremely high costs and collections pressure cause financial hardship for many small businesses. This is where experienced legal guidance can help business owners regain control of their financial futures.

Navigating Complex MCA Agreements

Merchant cash advance agreements contain complex legal terminology spanning dozens of pages. Most business owners sign these contracts without fully grasping the implications down the road.MCA lawyers help clients understand key aspects of their agreements, including:

  • Interest Rates and Fees – Beyond stated rates and fees, agreements specify other charges for late payments, defaults, and more. Lawyers ensure clients see the full picture.
  • Personal Guarantees – MCA companies often require owners to personally guarantee repayment, meaning their personal assets are also on the line.
  • Future Sales Commitments – By signing MCA agreements, businesses legally commit to providing a percentage of all future credit/debit card sales over a defined period of time. This can be longer than expected.
  • Account Access – Agreements typically provide MCA companies ongoing access to bank accounts and credit card processing statements to automatically extract repayments. Lawyers help clients regain control.

With a full understanding of MCA agreement terms, businesses can better respond to collection attempts and determine the most strategic ways to seek relief under the guidance of knowledgeable legal counsel.

Evaluating Violations of Lending Laws

While merchant cash advances carefully avoid categorization as loans, many still violate state laws around lending practices:

  • Usury Laws – Most states have usury laws limiting maximum interest rates lenders can charge. The equivalent APRs on MCA agreements often grossly exceed these limits.
  • Deceptive Practices – Luring desperate businesses with misleading information on costs, repayment terms, personal liability, etc. directly violates consumer protection laws.
  • Harassment – When collections get aggressive involving threats, intimidation, or freezing accounts, MCA tactics may constitute illegal harassment.

Experienced lawyers help build cases around these violations when seeking to void or settle MCA debts. Documenting misconduct also helps in negotiating agreements and defending against lawsuits. Legal expertise levels the playing field when MCA companies overstep legal bounds.

Settlement Strategies for MCA Debts

When an MCA spirals out of control, businesses need strategic guidance on resolving debts outside the legal system. Settlements provide win-win solutions allowing companies to move forward.Lawyers adept at negotiating debt settlements leverage several key strategies, including:

Document Hardships

Demonstrating real financial hardship helps gather sympathy and credibility when asking for relief. Lawyers work with clients to gather data illustrating decreasing sales, cash flow struggles, staff reductions, etc. These concrete examples put faces to the suffering caused by crushing MCA payments, justifying settlement.

Challenge Contract Terms

By combing through MCA agreements in detail, lawyers identify inconsistencies, ambiguities, and violations to challenge contract enforceability. Whether negotiating or defending against lawsuits, flawed contracts strengthen settlement leverage.

Propose Discounts

Most MCA companies pay roughly 80 cents per dollar advanced to purchase business sales contracts. Settling debts below this threshold allows them to recoup principal investments. Lawyers anchor negotiations around discounted lump-sum payments.

Threaten Legal Action

When MCA tactics clearly violate lending laws, lawyers threaten formal legal action seeking contract cancellations. The risk of total losses through lawsuits motivates companies to reach settlements.With the right strategic expertise guiding negotiations, most businesses can settle their MCA debts for significantly reduced sums that finally end the financial nightmare.

Defending Against MCA Lawsuits

When settlement talks stall and MCA companies file lawsuits against merchants, specialized legal defense serves as the last line protecting business owners.Experienced lawyers defend against MCA lawsuits using arguments like:

  • Improper Contract Terms – Demonstrating violations of state laws regarding lending practices, interest rates, consumer protections, etc.
  • Bad Faith Collections – Presenting evidence of unethical, deceptive, harassing tactics by MCA providers.
  • Inaccurate Reporting – Identifying and challenging inconsistencies, errors, and misrepresentations of repayment data, processing statements, and other records.
  • Counterclaims – Filing countersuits alleging misconduct, abuse, or exploitation by MCA companies.

The goal is typically not to “win” litigation outright, but to raise adequate challenges forcing a settlement. However, lawyers won’t hesitate to take cases to trial if MCA companies refuse reasonable negotiation offers.With an aggressive defense posture putting pressure on MCA companies, most cases end through settlements for a fraction of original debts.

Finding the Right Legal Help for Your Business

If an MCA has your business in crisis, partnering with knowledgeable lawyers may help resolve your situation. Look for attorneys with specific experience assisting companies settle MCA debts. Warning signs it may be time to seek legal help include:

  • Daily payments consuming more than 10-15% of credit/debit card volume
  • MCA company emptying or freezing bank accounts
  • Threats of lawsuits or harming credit ratings
  • Business struggling to cover basic operating expenses

When evaluating lawyers, ensure you understand fee structures and don’t hesitate to ask questions, such as:

  • How many clients have you helped settle MCA debts? What results did they achieve?
  • What strategies do you use to pressure MCA companies to settle?
  • Will you defend my business against lawsuits if needed? What are the costs?
  • What happens if we can’t reach a settlement agreement?

With the right legal partner applying their expertise to negotiate MCA debts, businesses can finally break free of crushing financial obligations. While the road may still be difficult, the light at the end of the tunnel makes it worthwhile.

About the Author

We are a dedicated team of financial experts who help businesses seeking relief from overwhelming debts. Unlike traditional bankruptcy firms, we focus specifically on efficiently settling obligations to get companies back on solid financial footing. By leveraging bespoke negotiating strategies fine-tuned over decades, we’ve helped thousands of clients resolve financial crises and secure brighter futures. Please contact us for a free consultation

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