Oklahoma City Business Owners Turn to Debt Settlement for Relief
Small business owners in Oklahoma City are struggling under the weight of excessive debt. Sources of business debt range from loans and lines of credit to merchant cash advances (MCAs) and unpaid invoices. As debt obligations become unmanageable, many entrepreneurs are now looking into legal debt relief options.
One potential solution for Oklahoma City business debt is settlement – an approach where an attorney negotiates with creditors to reduce what is owed. A recent law passed in Oklahoma aims to provide more transparency and disclosures around merchant cash advances, which have been criticized for predatory lending practices.
We spoke with John Davis, a business debt settlement lawyer in Oklahoma City, to learn more about the debt relief options available to local entrepreneurs.
The Small Business Debt Crisis
“Small businesses in Oklahoma City are dealing with a mounting debt crisis,” Davis explained. “Owners have leaned heavily on financing like loans and merchant cash advances to keep their companies afloat during recent economic challenges and the pandemic.”
But reliance on debt to finance operations has caused problems. “We’re seeing businesses struggle with excessive repayment burdens, missed payments, high interest, and fees,” said Davis. “Many have maxed out credit cards, face multiple collection lawsuits, or owe debts they realistically can’t afford to pay back.”
When business revenues can’t keep up with mounting IOUs, owners find themselves falling deeper in the hole. “Left unchecked, spiraling small business debt can lead to bankruptcies, destroyed credit scores, foreclosures, and lost companies,” warned Davis.
Finding Oklahoma Debt Relief
Staring down tens or hundreds of thousands in unpaid business debts, many Oklahoma City entrepreneurs seek legal solutions. “We help owners document their financial hardship and negotiate debt reductions through settlements,” Davis explained. “The goal is to agree on more affordable repayment terms.”
Settling business debts typically involves proving you can’t afford what you owe and negotiating a discounted lump sum payment to creditors. “If you owe $100,000 spread across various debts, we may get that reduced to $60,000 paid out over time,” said Davis. “Creditors accept less money to avoid even larger losses from bankruptcies and defaults.”
Business debt settlement carries risks, however. Missed settlement payments can nullify agreements and leave you liable for the original balance. “We make sure owners understand the pros and cons before pursuing settlements,” noted Davis. “Success requires strict budgeting to ensure you can handle the reduced payments.”
Bankruptcy is another option for eliminating or restructuring small business debts you can’t afford. Davis said, “The main downside is damaged credit and public records showing the bankruptcy.”
The Merchant Cash Advance Trap
One major pain point for Oklahoma City business owners is merchant cash advances or MCAs. “Merchant cash advances have lots of hidden risks that make them very expensive compared to regular loans,” explained Davis.
MCAs provide a lump sum to a business in exchange for fixed daily payments deducted from credit card receipts until the advance is repaid. While easy to qualify for, MCAs feature deceptively high equivalent interest rates often exceeding 100% APR.
Worse, MCA payments are taken first before the business gets their share of daily sales. “This can drain cash flow quickly and make it impossible to catch up if sales drop,” warned Davis.
Flawed contract language also ensnares borrowers. “Merchant cash advance agreements often have vague terms around costs, repayment, and liability if you default,” said Davis. “Make one late payment and some MCA companies will hit you with penalties and interest that double your balance.”
Adding insult to injury, it’s almost impossible to get out of an MCA contract. “Merchant cash advances include auto-renew clauses to keep payments flowing indefinitely even after you’ve repaid the original advance,” revealed Davis.
Given the pitfalls of MCAs, Oklahoma City business owners facing cash troubles should be very cautious before signing an agreement.
New Oklahoma MCA Disclosure Law
Thankfully, relief may be on the horizon for local entrepreneurs already stuck in predatory merchant cash advances. Oklahoma recently passed the Merchant Cash Advance Disclosure Act to reign in some of the worst lending abuses.
The 2021 law requires clearer disclosures from MCA providers about costs, fees, repayment terms, and policies if the borrower defaults or tries to cancel. “It’s a small step, but this transparency makes it easier for attorneys to review agreements for violations,” said Davis.
Armed with documented MCA abuses and flaws, lawyers can now build stronger cases to invalidate these contracts. “If we prove an agreement violates Oklahoma’s disclosure rules, we may get it thrown out so remaining balances are erased,” explained Davis.
Invalidating the MCA contract also stops payments deducted from the business’s credit card sales. “Our goal is releasing owners from predatory agreements so they regain control of their revenue streams,” noted Davis.
Finding the Right Business Debt Attorney
Davis emphasized that working with a qualified legal professional is key to successfully reducing or eliminating unaffordable small business debts. But not all attorneys have relevant experience.
When searching for counsel on business debt relief, Davis suggests asking these questions:
- How many years have you handled small business debt cases in Oklahoma?
- Are you familiar with state laws and recent MCA disclosure rules?
- What strategies have you used to successfully challenge creditors and get debts reduced or invalidated?
- Can you provide references from past Oklahoma small business clients?
He also recommended looking for lawyers that offer free case reviews and consultations with no upfront payments.
The stakes are high for Oklahoma City entrepreneurs weighed down by loans, MCAs, unpaid invoices, judgments, and other unserviceable debts. But options like settlement and bankruptcy can provide much-needed relief. And new state regulations around merchant cash advances finally offer a glimmer of hope for escaping predatory contracts.
With the right legal guidance tailored to their situation, local business owners can resolve debts, restore stability, and focus on recovery. As Davis put it, “We want to help entrepreneurs move past financial challenges so they can rebuild and thrive again.”
Key Takeaways
- Small business debt is creating a crisis for Oklahoma City entrepreneurs
- Debt settlement negotiations and bankruptcy filings are two legal options for relief
- Merchant cash advances are risky financing arrangements with hidden downsides
- Oklahoma’s 2021 MCA disclosure law aims to increase transparency
- Experienced attorneys can review MCA contracts for violations to invalidate debts
- Finding qualified legal help is critical for successfully reducing or eliminating unaffordable business debts
