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.

• Rates often exceed 50% or even 100% annually
• Daily repayments are taken automatically from credit card sales
• MCAs gain access to process all credit transactions
• Harsh penalties, fees, and aggressive collections for missed payments

While MCAs provide fast access to funds when traditional financing is unavailable, the repayment structure often creates a debt trap. Businesses expect to repay 1.5-2.5X the amount borrowed due to the high fees and short payment terms.

Predatory Lending Tactics

The fast cash may seem like a lifeline at first, but MCA companies often utilize predatory tactics to take advantage of desperate business owners. Some of the issues reported by recipients of merchant cash advances include:

• Misrepresented terms during the signing process
• Universal Payment Authorization allowing complete access to bank accounts
• Required daily payments depleting operating capital
• Excessively high rates of 50-400% APR
• Arbitrary increases in daily payments
• Immediate debt collection calls for a single missed payment
• Threats to contact customers about outstanding debts
• Personal lawsuits and threats to owner’s personal credit

These practices push borrowers into a debt spiral, making it impossible to catch up while continuing business operations.

Defending Against Abusive MCA Companies

If you feel trapped in an abusive agreement with an MCA company, a business debt defense lawyer can review your case and determine the best strategies to resolve the situation. An attorney specializing in this area understands the typical tactics used by these alternative lenders and can build legal arguments to invalidate or settle the debts.Potential defenses include:

Challenging Predatory Lending

• Usury laws limiting maximum interest rates
• Failure to adhere to state lending regulations
• Arguments the rates and terms are unfair or deceptive

Contesting the Underlying Agreement

• Misrepresentation of terms at signing
• Disputing the arbitration clause to bring suit
• Challenging personal guarantees or confessions of judgement

Settling Debts Through Bankruptcy

• Filing Chapter 11 to restructure finances
• Chapter 7 to discharge qualifying business debts
• Negotiating discounted settlements

An experienced lawyer can assess if any of these defenses apply and represent you in negotiations or legal proceedings.

What a Business Debt Lawyer Can Do

Here are some of the ways a skilled business debt and defense attorney can help:

• Review the full history of your MCA agreement – Analyze the contract, payments, fees, and collection communications to build your case.
• Determine if the MCA contract is legally enforceable – Identify potential contractual deficiencies or lending violations.
• Challenge arbitration clauses – Fight to bring your case before a judge rather than private arbitration.
• Dispute unreasonable fees or interest – Argument that the rates and terms are abusive or unfair.
• Negotiate debt reductions – Use legal arguments as leverage to settle debts at a discount.
• Defend against personal liability – Challenge guarantees and confessions of judgement.
• Stop aggressive collections – Send cease and desist letters to halt harassment.
• Restructure finances through bankruptcy – File Chapter 11 or Chapter 7 on the business’s behalf.
• Defend lawsuits – Represent you in legal proceedings brought by MCA companies.
• Improve future business finances – Provide guidance to avoid repeat issues.

Reputable business debt attorneys have successfully reduced or eliminated millions in small business debts from MCAs and other alternative lenders. They understand the intricacies of these complex agreements and where potential legal vulnerabilities may exist.

Selecting the Best Legal Team

As you search for legal representation, look for an attorney with specific experience fighting merchant cash advance debts. Ask the following questions:

• Do they have a proven track record with these types of cases?
• Can they provide references from past clients?
• Are they familiar with the predatory lending tactics of MCA companies?
• Will they personally handle your case or pass it to an associate?
• How transparent are they about fees and billing?

Avoid any lawyer suggesting illegal tactics like hiding assets or falsifying financial records.

Costs of Professional Legal Assistance

Hiring a business debt relief attorney requires an investment, but it protects business assets in the long run. Legal fees often range from $3,000 to $10,000 depending on the complexity of the case. However, a skilled lawyer can eliminate or reduce debts by ten times that amount.Compare this to the devastating costs of:

• Letting debts spiral out of control
• Closing down a once profitable business
• Damaging your commercial credit for years
• Personal judgements against your assets

View legal counsel as an investment into your future business success. Their expertise can help overcome temporary setbacks so you can rebuild and thrive.

Overcoming Debt

Facing extreme MCA debts feels scary, but you have more options than simply acquiescing to abusive lenders. Business debt lawyers are ready to evaluate your situation and build strong legal arguments on your behalf. With their counsel, you can settle debts in a reasonable manner without sacrificing your livelihood. Reach out for a consultation so you can finally see the light at the end of the tunnel.