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MCA Defense Lawyers Business Debt Settlement

Merchant cash advance (MCA) loans have become an increasingly popular way for small businesses to access quick financing. However, some MCA lenders engage in predatory practices that can leave business owners saddled with crushing debt. If you find yourself facing aggressive collections or even threats of criminal charges from an MCA lender, working with an experienced defense lawyer can help protect your rights.

The Risks of MCA Loans

Merchant cash advances provide businesses with lump sums of cash in exchange for a percentage of future credit card sales. Unlike traditional small business loans, MCAs don’t require a strong credit score or consistent revenue. This makes them enticing for struggling companies.However, MCA loans come with sky-high interest rates, often exceeding 100% APR when fees are factored in. Lenders can access a business’s bank accounts directly to withdraw payments, putting cash flow at risk. If the business falls behind on payments, MCA companies frequently resort to abusive collection tactics.

Aggressive Collections

When a business defaults on an MCA loan, lenders may:

  • Make harassing phone calls multiple times a day
  • Send intimidating letters threatening legal action
  • Try to embarrass the business by contacting customers, vendors, and employees
  • Refuse to provide detailed accountings of the debt
  • Add arbitrary fees to the balance

Threats of Criminal Charges

Some MCA lenders falsely threaten business owners with criminal theft or fraud charges for missing payments. While breaching a civil contract is not a crime, these scare tactics pressure owners to pay debts they can’t afford.

Lawsuits and Judgments

MCA companies frequently file lawsuits against delinquent borrowers. Many owners don’t defend themselves, resulting in default judgments that allow lenders to seize assets or garnish bank accounts. But experienced lawyers can often get these judgments dismissed or greatly reduced.

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Working With a Defense Lawyer

If you‘re facing collections or legal action from an MCA lender, contacting a lawyer immediately is critical. An attorney experienced in MCA defense can help in several key ways:

  • Review loan terms and account records – Identify abusive or illegal loan provisions that may provide defenses
  • Halt collections activities – Send cease and desist letters to stop harassment and intimidation
  • Contest lawsuits – Challenge improper legal filings and contractual breaches
  • Negotiate settlements – Leverage defenses to lower payoff amounts
  • Defend against threats – Fight back against unlawful threats of criminal charges
  • Protect assets – Block attempts to seize accounts and property

Having a knowledgeable lawyer on your side levels the playing field against unscrupulous MCA lenders and can save your business.

Common MCA Defense Strategies

MCA lawyers employ a range of strategies to protect borrowers’ rights and limit lenders’ recovery. Common defenses include:

Usury Violations

  • Many states have usury laws capping interest rates on loans. MCA rates often grossly exceed these caps.
  • Violating usury statutes can invalidate loan obligations and allow recovery of payments.

Deceptive Practices

  • MCA companies frequently misrepresent or obscure key loan terms.
  • Consumer protection laws prohibit deceptive business practices, which can nullify contracts.

Unconscionability

  • When loan terms are unduly oppressive or shock the conscience, courts may refuse to enforce.
  • Grossly inflated rates combined with aggressive collections can establish unconscionability.

Breach of Contract

  • MCA lenders often violate notice requirements, impose unauthorized fees/penalties, or misapply payments.
  • These contractual breaches undermine lenders’ ability to collect.

Statute of Limitations

  • Debt collection laws impose time limits on legal recovery efforts, typically 3-6 years.
  • Outdated debts cannot be successfully sued upon or reported to credit agencies.

The Debt Settlement Process

If you have fallen behind on an MCA loan, settling the debt for less than you owe may be an option. An experienced lawyer can negotiate deals that are favorable to the borrower. The key steps are:

See also  Baltimore Business Debt Settlement Lawyers

Financial Analysis

Your attorney will thoroughly review the loan terms, account records, collections history and your current finances. This helps determine appropriate settlement offers.

Settlement Negotiations

Leveraging identified defenses and weaknesses, your lawyer negotiates with the MCA lender to reduce the amount owed. Typical settlements range from 25% to 80% of the balance.

Payment Plan

The settlement agreement will lay out a structured payment schedule over several months for the reduced payoff amount. This creates an affordable path to resolving the debt.

Legal Protections

As part of the deal, the MCA company must agree to stop all collections and legal activities while you make payments. Violating these terms nullifies the settlement.

Why Legal Defense Matters

Dealing with MCA loan distress can be an extremely challenging and emotional situation for small business owners. Unscrupulous lenders exploit borrowers who lack the expertise and resources to protect themselves.But standing up to intimidation and harassment is crucial. Having an experienced lawyer guide you through the process can empower you to take control and make the best of difficult circumstances. With legal defenses on your side, predatory lenders will often back down and agree to reasonable settlements.Though the debts cannot be made to disappear, an attorney’s involvement can result in right-sized payoffs that don’t cripple your business. Freed from the burden of relentless collections, you can focus energy on moving your company ahead.

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