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New York MCA Defense Lawyers Business Debt Relief

Running a small business is extremely difficult, especially when it comes to managing finances and cash flow. Many business owners turn to merchant cash advances (MCAs) and other alternative lending options when they need quick capital, but these loans often come with predatory terms and exorbitantly high interest rates that push borrowers deeper into debt.If you‘re a New York business owner struggling with MCA debt, know that you have options – including working with attorneys to defend against lenders and negotiate settlements. Here‘s an overview of MCA loans, common issues that lead to legal trouble, defenses business owners can use, and how experienced lawyers can help.

Understanding Merchant Cash Advances

A merchant cash advance provides a business with a lump sum of capital in exchange for a percentage of future credit card and debit card sales. It‘s not technically considered a loan under New York state law, so MCA companies can skirt consumer protection laws that regulate bank loans and charge sky-high interest rates.While MCAs provide quick access to funds when traditional lenders won’t approve financing, they often include predatory contract terms that take advantage of small business owners:

• Exorbitantly high effective interest rates often exceeding 100% APR
• Daily repayments that quickly drain bank accounts
• Personal guarantees and confessions of judgement that put personal assets at risk
• Arbitrary payback amounts unrelated to actual credit card sales
• Lack of transparency around final costs and repayment totals

Within months, many businesses find themselves sending virtually all profits to the MCA company but still owing the full advance amount plus interest fees. Before long, the crushing debt makes it impossible to keep up with payments at all.

Common Legal Issues That Arise

When businesses inevitably fall behind on MCA payments, predatory lenders will use every tactic possible to collect – even illegal ones. Some common issues include:

• Harassment and intimidation: Lenders will call business owners incessantly, threaten lawsuits and bankruptcy, and contact vendors, employees, and customers demanding information.

• Attempting to access personal bank accounts: Even if the MCA contract only allows access to business accounts, lenders will pressure owners to provide access to personal accounts.
• Freezing accounts and withholding revenues: MCA companies will arbitrarily freeze accounts so businesses can’t access any money at all and intercept payments from customers and credit cards so all revenue goes directly to them.

• Confessions of judgement: The MCA contract may include a confession that allows lenders to obtain a judgement without ever going to court. Lenders then use the judgement to seize assets and garnish bank accounts.

• Lawsuits and arbitration: Predatory MCA companies are quick to sue in court or push into arbitration over breaches of extremely one-sided contracts. Without legal help, owners often end up with judgements against them.

Facing harassment, account seizures, and potential bankruptcy from an unpayable MCA can be an absolute nightmare. But New York business owners have legal defenses.

New York Defenses Against Predatory MCA Lenders

New York actually has some of the strongest laws in the country against predatory lending practices. Business owners can work with lawyers to build cases based on:

Usury Laws

New York‘s civil and criminal usury laws make it illegal for lenders to charge interest rates over 16% for small business loans under $250,000 and 25% for loans over $250,000.Usury laws don’t explicitly apply to MCAs, but lawyers can effectively argue that the contracts violate the spirit of usury laws. With interest rates often exceeding 100%, a strong case can be made that the terms are designed to illegally extract usurious interest rates from borrowers.

Unconscionability

Commercial contract law includes the legal principle of unconscionability, which basically means contract terms that are shockingly unfair or one-sided can be invalidated.Given how predatory MCA contracts often are, lawyers can build strong cases around unconscionability. Important factors include the business owner lacking sophistication around complex legal and financial matters, deceptive or obscure contract terms, excessive interest rates, and the lender having far superior bargaining power.

RICO Laws

New York’s Racketeer Influenced and Corrupt Organizations (RICO) Act allows prosecutors to combat criminal organizations. But the law also provides civil recourse for victims of schemes designed to extort money.As such, RICO laws can potentially provide remedies against MCA lenders engaged in systematic predatory behavior. Successful RICO cases could lead to awards covering legal fees plus triple damages.

How Can NYC Business Debt Relief Lawyers Help?

Fighting back against abusive MCA lenders takes in-depth legal knowledge and experience. Attorneys can provide immense value by:

• Sending demand letters requiring lenders cease illegal collection activities
• Filing complaints and representing clients before regulators like the New York Department of Financial Services
• Defending against lawsuits and arbitration demands
• Bringing affirmative litigation against lenders under usury laws, unconscionability, RICO, and other claims
• Negotiating settlements providing deep relief from balances owed

At the end of the day, experienced lawyers give overwhelmed small business owners the best chance to defend their interests. Having experts in your corner levels the playing field and forces predatory lenders to back down.

Delancey Street – NYC Business Debt Relief Lawyers

Delancey Street has extensive experience representing New York business owners against MCA lenders and other predatory financiers. Our dedicated team of legal and financial experts can help protect your business.We start by thoroughly analyzing MCA contracts to identify weaknesses and potential violations. From there, we employ hard-hitting legal strategies specially designed to neutralize abusive lenders.Rather than jumping straight to expensive litigation, we leverage our expertise in the MCA industry to negotiate fair settlements that provide substantial relief. We’ve helped many clients settle balances for pennies on the dollar.At Delancey Street, we‘re committed to helping NYC business owners gain financial freedom from predatory debts. Our legal team offers free consultations, so contact us today to discuss your situation and options for fighting back:

Phone: (212) 210-1851
Website: www.delanceystreet.com

Frequently Asked Questions

Still have questions about New York business debt relief? Here are answers to some common queries:

Are MCA loans really that bad?

• Yes – the typical contract terms are designed to trap business owners in spiraling, unpayable debt. Interest rates often exceed 100% APR and daily payments barely touch balances owed. Before long, businesses end up sending their entire revenue streams to lenders but see no progress on paying down principal.

What are the first steps if I’m struggling with MCA debt?

• First, know that you have options – New York has relatively strong commercial borrower protections. Second, document all communication and records related to your MCA agreement. Finally, contact our experienced legal team for a free consultation. We can analyze your situation, identify potential violations by the lender, and discuss defense strategies.

What specific violations should I look for in my MCA contract?

• Some of the most common predatory terms our lawyers look out for include interest rates above 25%, personal guarantees/confessions of judgement, deceptive language around potential balances owed, arbitrary repayment calculations unrelated to card processing volumes, and contractual terms allowing lenders to raid personal bank accounts.

Can you really get MCA debts reduced or dismissed?

• Yes – in many cases, substantial relief is possible. We’ve helped clients settle balances for as little as 10-20% of what the MCA company claimed was owed. When lenders face potential legal liability or regulatory fines, they become much more willing to provide debt forgiveness. By asserting borrower rights, we transform business owners from victims into threats.

How much do your services cost?

• We offer free, no-obligation case consultations and only collect fees if we secure relief for you. Our standard agreements include a small upfront retainer and a contingency fee that’s a percentage of any savings achieved – nothing comes out of your pocket until we put money back into it. This ensures our incentives align with clients and we won’t pursue litigation unless it’s the best path forward.