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MCA Defense Lawyers Provide Expert Assistance With Merchant Cash Advance Debt

Merchant cash advances (MCAs) can provide quick access to capital for small businesses. However, the terms of MCA agreements are often predatory, with exorbitant interest rates and aggressive collection tactics. If your business is struggling with MCA debt, specialized legal assistance can help protect your assets and negotiate reasonable repayment terms.

How MCAs Work and Why They Can Be Problematic

A merchant cash advance provides a business with a lump sum of capital in exchange for a percentage of future credit card sales. It is not technically considered a loan, so MCA companies can bypass state laws capping interest rates.

  • High factor rates of 1.2 to 2 mean businesses repay 120-200% of the original advance
  • Daily repayments as a percentage of credit card sales, usually 10-20%
  • No fixed end date – you pay until the balance is repaid in full

This open-ended structure allows businesses fast access to funds but can quickly become unmanageable. If sales dip, the repayment amounts remain the same, forcing businesses to choose between basic operating costs and crippling MCA payments.Aggressive collection tactics like freezing bank accounts or suing business owners personally compound these issues. However, legal defenses exist to curb unfair collection practices. Experienced attorneys can help businesses regain control of the situation.

Common Legal Defenses Against Predatory MCAs

If you are facing litigation over unpaid MCA debt, possible defenses include:

  • Unconscionability – MCA agreements with exorbitant interest rates or unfair terms may be ruled unenforceable.
  • Breach of contract – If the MCA company violates terms of the agreement, you may no longer be obligated to repay.
  • Improper service – If you were not properly served with notice of a lawsuit, the court may throw out the case.
  • Statute of limitations – Debt collection lawsuits must adhere to time limit laws based on your state.
  • Usury violations – Interest rates above state maximums may invalidate parts or all of the debt.
See also  10 Questions to Ask Business Debt Settlement Companies

An attorney experienced with MCA agreements can analyze the specifics of your situation to identify potential defenses. The right defense strategy can lead to dramatically reduced repayment obligations or even the outright dismissal of collection lawsuits against your business.

How Can a Business Attorney Assist With MCA Debt?

Beyond asserting legal defenses in court, a knowledgeable business attorney brings additional value to struggling companies facing MCA debt, including:

1. Reviewing and Renegotiating MCA Agreements

The detailed terms in MCA contracts often contain weaknesses that an attorney can exploit to help their client. For example, improperly defined default clauses or violations of state lending laws. Your attorney can leverage these issues to:

  • Negotiate reduced payback amounts and interest rates
  • Extend the payback period so payments better match cash flow
  • Remove personal liability stipulations that put your personal assets at risk

2. Advising on Bankruptcy and Debt Settlement Options

If MCA payments remain unmanageable even after contract renegotiation, bankruptcy or debt settlement may become necessary. An attorney experienced with small business debt can help you understand options like:

  • Chapter 7 Bankruptcy – Business assets liquidated to pay creditors. Remaining debt discharged.
  • Chapter 11 Bankruptcy – Business continues operating under court protection while developing repayment plan.
  • Chapter 13 Bankruptcy – Repayment plan developed from future earnings over 3 to 5 years.
  • Debt Settlement – Lump sum settlement paid is accepted as payment in full on the outstanding balance.

3. Defending Against Aggressive Collection Activities

When amicable agreement cannot be reached, MCA companies often pursue aggressive collection activities like:

  • Freezing business bank accounts
  • Harassing business owners with frequent calls
  • Filing lawsuits against both the business and owners personally

Your attorney can put a stop to this harassment while building a defense strategy. They send official cease and desist notices while gathering documentation on improper collection practices. These materials may support legal counterclaims against the MCA company for breaking federal and state debt collection laws.

See also  Albuquerque MCA Defense Lawyers Business Debt Relief

4. Asserting Counterclaims Against Predatory Lenders

Beyond defending against collection lawsuits, your attorney may identify viable counterclaims that allow you to go on the offense, such as:

  • Breach of contract – If the MCA company violates terms of the agreement.
  • Fraudulent inducement – If the MCA company made false statements to convince you to sign.
  • Usury violations – Interest rates above state maximums.
  • Deceptive business practices – Misleading statements about repayment terms or other key factors.

Successful counterclaims can lead to civil penalties paid to your business, giving you leverage to negotiate reduced payback amounts.

Key Factors When Selecting an MCA Defense Attorney

Not all attorneys have relevant experience defending businesses from MCA companies. Be sure to research these key criteria:

  • MCA-Specific Expertise – Have they successfully fought similar cases before? Can they provide references?
  • Courtroom Litigation Skills – If negotiations fail, will they capably represent you in court?
  • State-Specific Knowledge – Do they understand the lending laws and debt collection regulations for your state?
  • Reasonable Fees – Will they offer flexible payment plans to ease the financial burden?

What to Expect During the MCA Defense Process

If you decide to pursue legal defenses against your MCA debt, the general process will include:

1. Case Review and Strategy Consultation

Your attorney will thoroughly review your MCA agreement, accounts, financial records, and any legal complaints filed. They will explain your options, likelihood of success, and projected costs to help you make an informed decision on next steps.

2. Attempt Negotiation and Settlement

In most instances, your attorney will first try contacting the MCA company directly to negotiate an amicable settlement. Reasonable offers that avoid court can benefit both parties.

3. Pre-Trial Preparations

If the MCA company refuses settlement and continues collection lawsuits, your attorney will handle required tasks like:

  • Drafting legal filings outlining your defenses and counterclaims
  • Gathering evidence through discovery requests and subpoenas
  • Taking depositions asking questions under oath
  • Filing motions to dismiss certain claims or compel action
See also  Alabama MCA Defense Lawyers Business Debt Relief

4. Courtroom Litigation

Should all pre-trial actions fail to generate a settlement, your case would then go to trial. An experienced business trial attorney is key for successfully asserting your defenses in court.

Make the Smart Choice and Seek Legal Assistance With MCA Debt

The confusing structure of merchant cash advance agreements combined with predatory lending practices trap many small businesses in debt spirals. Know that legal options exist to fight back. An attorney well-versed in MCA contracts can review your situation, identify potential violations, and take action to reduce your repayment burden. They can also defend against aggressive collections harassment so you can focus on operating your business.Don’t wait – contact an expert MCA defense attorney today to discuss your situation during a free initial consultation. Protect everything you have worked so hard to build. You deserve a second chance.

Common Situations That Lead Businesses to Seek MCA Debt Relief

While the flexibility and quick funding provided by merchant cash advances may initially seem appealing, several common situations can quickly turn them into a nightmare for small business owners:

Revenue Instability

  • Economic downturns
  • Seasonal business cycles
  • Loss of major customers
  • Increased competition
  • Rising operating expenses

Repayment amounts with MCAs typically run 10-20% of daily credit card sales. This structure leaves businesses vulnerable when revenues decline but daily payments remain the same.



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