MCA Defense Lawyers Business Debt Settlement

Businesses can easily find themselves in debt through no fault of their own. An unexpected downturn, a major expense, cash flow issues – there are many reasons a business may struggle to pay its debts. Merchant cash advances (MCAs) can seem like an easy solution, but they often lead to more problems. If your business is facing debt collection or lawsuits from MCA lenders, there are options to find relief.

The Risks of Merchant Cash Advances

Merchant cash advances provide businesses with quick access to capital by essentially selling a percentage of future sales. Compared to traditional business loans, MCAs have high interest rates and aggressive collection tactics. Many businesses sign these agreements without fully understanding the consequences.When business slows down, MCA payments become increasingly difficult to make. Lenders may quickly resort to debt collection calls, lawsuits, or garnishing your merchant accounts. Within months, a struggling business can find itself fighting for survival under a mountain of debt.But businesses do have rights in these situations. There are defenses available, and the agreements themselves may be legally questionable. An experienced business debt relief attorney can be invaluable in navigating this process to reach the best possible outcome.

Do You Qualify for Relief Programs?

Before considering legal defenses, it’s important to understand whether your business qualifies for government or nonprofit debt relief programs. Options include:

• SBA Disaster Loans – The Small Business Administration provides low interest loans to businesses impacted by declared disasters. This includes COVID-19 assistance.
• State Tax Relief – Many states and municipalities implemented tax breaks and other relief for businesses during COVID-19 shutdowns.
• Nonprofit Assistance – Organizations like the Jewish Free Loan Association provide assistance for struggling business owners based on factors like medical emergencies, natural disasters, or other unforeseen circumstances.

Determining eligibility for these programs is complex, but an attorney experienced in debt relief cases can help you understand the requirements. This assistance alone makes consulting with legal counsel worthwhile.

Assessing MCA Agreement Legality

Beyond relief programs, many MCA agreements themselves have legally questionable terms. An attorney can assess if violations of state or federal laws took place, which may provide leverage in settlement negotiations or court. Some issues to investigate:

Usury Rate Violations

• State laws cap interest rates on loans, but MCA agreements claim to sell future receivables rather than lend money. However, courts increasingly rule these are in fact high interest loans subject to rate caps.

Failure to Register as Lenders

• Most states require registration and licensing for lending activity. Unregistered MCA companies issuing what courts consider high interest loans potentially violate these requirements.

Fraud and Misrepresentation

• Evidence showing an MCA company misrepresented terms, failed to adequately disclose rates and fees, or manipulated documents could demonstrate fraud.

The exact approach depends on state laws and the specific facts involved. An attorney experienced with MCA agreements can best advise you on any potential violations.

Good Faith Negotiation Attempts

Before taking an aggressive legal stance, it’s best to demonstrate a good faith effort to reach an agreement outside of court. An attorney can negotiate a settlement or payment plan that eases the burden on your business while satisfying the MCA company’s needs.Be prepared to provide full transparency into your finances to support settlement discussions. Relief options an attorney might secure include:

• Lump Sum Settlements – One-time payments for a percentage of the full balance owed.
• Payment Plans – Agreements to pay reduced regular amounts over an extended time period.
• Amended Repayment Terms – Adjustments to the original agreement, such as lower payments or waived fees.

Approaching negotiations in good faith shows the court you aim for a fair outcome absent legal action. If talks break down, it strengthens your position in subsequent legal fights.

Last Resort Legal Defenses

If negotiation attempts fail, an attorney may recommend filing legal counterclaims asserting:

Unconscionability

• Seeking a ruling that one-sided, unfair agreement terms are legally unenforceable.

Breach of Contract

• Arguing the MCA company violated contract terms in the handling of the account.

Violations of Federal & State Collection Laws

• Debt collectors have strict guidelines under the Fair Debt Collection Practices Act and state laws. Documented violations create causes for action.

The viability of each approach depends on state laws and case specifics. An experienced legal team can advise which claims offer the highest probability of success.

Finding the Right Representation

Defending against MCA lenders requires an attorney well-versed in credit law, debt collection, and financial litigation. Key credentials to seek include:

• Debt Collection Defense Background – A strong understanding of consumer protection laws and debt collection restrictions.
• Financial Litigation Experience – Proven experience arguing complex banking and lending cases.
• MCA Agreement Knowledge – In-depth knowledge of MCA terms, structure, and typical violations. Without direct MCA experience, even seasoned litigators may struggle to mount an effective counterclaim.

Avvo.com and FindLaw.com provide directories to search for qualified local counsel. Retaining an attorney experienced in financial litigation and credit law need not be expensive. Many provide free initial consultations and flexible payment plans.