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Phoenix MCA Defense Lawyers Offer Hope for Businesses Struggling with Debt
Businesses in Phoenix facing legal issues with merchant cash advances (MCAs) often feel overwhelmed and unsure where to turn. However, experienced Phoenix MCA defense lawyers can provide the help these businesses desperately need.
How MCAs Can Trap Businesses in Debt
Merchant cash advances may seem like an easy solution when cash flow is tight. However, the terms are often predatory, catching business owners in an endless cycle of debt they cannot escape.
Some of the common issues with MCAs include:
- Extremely high effective interest rates – Some MCAs charge over 200% APR when all fees are calculated.
- Daily repayment requirements – MCAs usually take a percentage of daily credit card sales, regardless of actual profits.
- Lack of transparency – Key terms may be hidden or confusing, leading to unexpected costs.
- Personal guarantees – Business owners’ personal assets may be put at risk if the MCA is not repaid.
As a result, MCA repayment can quickly consume all available cash flow, leaving businesses unable to cover ordinary expenses. The business falters, and the owners’ personal finances are jeopardized.
Legal Defenses Can Invalidate or Reduce MCA Debt
The good news is that experienced Phoenix business lawyers and debt relief attorneys can often mount strong legal challenges against predatory MCAs.
Potential defenses include:
Usury Violations
Arizona has strong usury laws against excessively high interest rates. If the effective rate on the MCA exceeds legal limits, the contract may be declared void. All interest and fees could potentially be invalidated.
Unconscionability
If MCA terms are unjustly one-sided or blatantly unfair, courts have the power to reform or invalidate the agreement. Factors like lack of transparency, unreasonable default clauses, or excessive fees can establish unconscionability.
Breach of Contract
If the MCA provider violates terms of the agreement – for example, by suddenly increasing payments or fees – they may be sued for breach of contract. Damages could potentially offset amounts owed under the MCA.
Settlements and Debt Reduction Also Possible
Even if a legal defense is not clear cut, experienced attorneys familiar with MCAs can often negotiate settlements for significantly reduced payoff amounts. Some options include:
- Lump-sum discounts – Paying a lower lump sum to satisfy the remaining MCA balance.
- Payment plans – Restructuring the payoff terms to affordable installment payments.
- Debt consolidation – Rolling multiple debts into a single loan at lower interest.
In some cases, it may even be possible to negotiate a release of personal guarantees tied to the MCA.
Delancey Street Offers Hope and Help
While each business’s situation is different, the attorneys and professionals at Delancey Street have extensive experience helping companies escape the traps of predatory MCAs. Call us today at 212-210-1851 for a free consultation.
Some of the services we provide include:
- In-depth legal review – We thoroughly analyze the MCA agreement to spot potential violations.
- Evaluation of defenses – Our lawyers explore whether legal defenses like usury or unconscionability may apply.
- Settlement negotiations – We negotiate directly with MCA providers to reduce or eliminate amounts owed.
- Debt restructuring – We help consolidate debts into affordable payment plans.
- Ongoing support – We continue working closely with our clients over months or years until all debts are resolved.
You Have Options – Let Us Help
Predatory merchant cash advances happen too often because struggling businesses don’t know their rights or available defenses. The friendly professionals at Delancey Street can help provide that knowledge while fighting to protect your interests. You have options – contact us today to discuss your specific situation.
