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Minneapolis MCA Defense Business Debt Relief

Businesses in Minneapolis are facing increasing financial pressures from the economic downturn and rising interest rates. Many have turned to merchant cash advances (MCAs) and business loans to stay afloat. However, predatory lending practices and exorbitant fees can quickly spiral a business into unmanageable debt.

The Dangers of MCAs and Business Loans

Merchant cash advances seem like an easy fix when cash flow is tight. You get an upfront lump sum of cash in exchange for a percentage of future credit card sales. But read the fine print carefully:

• Interest rates often exceed 50% when accounting for fees
• Daily repayments can drain bank accounts fast
• Personal guarantees put your home and assets at risk

Similarly, high-interest business loans can do more harm than good if you fall behind on payments. Both MCAs and business loans can lead to:

• Missed payments and default notices
• Harassing calls from collectors
• Lawsuits and threats of bank levies
• Business assets and personal assets being seized

The results can be devastating – lost livelihoods, damaged credit, bankruptcy, foreclosures. But you have options, even if a lawsuit has already been filed.

Defense Strategies for MCA and Business Loan Lawsuits

The attorneys at Delancey Street specialize in defending Minneapolis small businesses from predatory MCAs and lenders. We fight back against shady debt collection practices to protect your assets and save your business.

Unaffordable Payments

A common predatory tactic is structuring the repayment schedule to be unaffordable for the business’s cash flow. This inevitably leads to default and triggers large penalties and fees.We can argue that forcing unrealistic payments constitutes bad faith and predatory lending. There may be grounds to invalidate the personal guarantee or lower the repayment amount to affordable installments.

Unconscionable Terms

MCAs and business loans often contain terms so egregiously one-sided they are ruled legally unconscionable. This includes:

• Excessive interest rates over 35-50%
• Misrepresented or obscured fees
• Confusing legalese favoring the lender

If a contract contains unconscionable terms that unjustly favor one party, we can petition for the agreement to be invalidated.

Fraud and Misrepresentation

Lenders have a legal obligation to fully disclose all terms, fees, and conditions before securing a signature. Hidden costs and false promises are grounds for fraud claims.

• Were promised savings or outcomes misrepresented?
• Were crucial contract terms obscured?
• Were you pressured or rushed to sign without reviewing?

Fraudulent misrepresentation provides solid legal grounds to fight the lawsuit.

Strategies to Beat MCA and Business Loan Lawsuits

The Minneapolis business attorneys at Delancey Street are aggressive litigators who leave no stone unturned for our clients. We will tenaciously fight lenders by:

Contesting Service of Process

If you were not properly served notice of the lawsuit, the court lacks jurisdiction. We can file a motion to dismiss if service was:

• Hand-delivered to the wrong person
• Left at an improper location
• Sent to an outdated address

Contesting improper service of process can instantly get the lawsuit thrown out.

Discrediting Plaintiff Standing

It’s common for predatory lenders to “assign” or sell defaulted debt to third-party debt buyers for collections. The plaintiff suing you may not even be the original creditor.We can fight the lawsuit by:

• Demanding proof they own the debt – Debt buyers often lack proper documentation of the account transfer. If they can’t validate ownership of the debt, their lawsuit crumbles.
• Exposing robo-signed documents – Many debt collection affidavits are signed automatically without proper account review. This fails to establish standing and undermines their credibility as plaintiffs.

Good Faith Negotiations

If there are legitimate grounds for the lawsuit, negotiating a settlement with the plaintiff may be the most pragmatic option.

• Settle for pennies on the dollar – If you owe $100k, we may secure a deal for $20-30k based on their risk of losing in court.
• Favorable repayment terms – We can structure a reasonable monthly payment plan and freeze interest accrual.

Settling avoids a public court battle and gives you financial breathing room to repay.

Bankruptcy May Be an Option

If debts still feel insurmountable, bankruptcy may provide a fresh start:

• Chapter 7 Bankruptcy – Business assets are liquidated and eligible debts discharged. Best if shutting down.
• Chapter 11 Bankruptcy – Business continues operating under a court-supervised repayment plan over 3-5 years.
• Chapter 13 Personal Bankruptcy – Individual debts restructured, assets protected. Typically lasts 3-5 years.

Bankruptcy stops collections activity in its tracks, providing immediate financial relief. And filing bankruptcy won’t necessarily dissolve your business if structured properly.

What to Expect During a Free Consultation

During a free case review, our legal team will:🔹 Evaluate your situation – Review the full history behind the business debts and collection efforts. Identify areas for defense strategies.🔹 Assess litigation risk – Gauge the plaintiff’s appetite and capacity for fighting in court based on case specifics.🔹 Discuss negotiation leverage – Explore negotiation angles to settle for less or secure favorable repayment terms.🔹 Review bankruptcy options – See if Chapter 7, 11, or 13 bankruptcy could provide a fresh start.🔹 Create action plan – Craft a customized legal strategy to defend the lawsuit and resolve debts.We know this is an extremely stressful situation. Our lawyers provide straight talk and practical options. With over 50 years collective experience defending Minneapolis small businesses, you can trust our strategic advice.