Columbus MCA Defense Lawyers Business Debt Relief
If you run a small business in Columbus, Ohio, chances are you’ve taken on business debt at some point. Loans and merchant cash advances (MCAs) can provide necessary capital, but they also come with risks if not managed properly. When business owners face excessive debt burdens or predatory lending practices, working with a Columbus MCA defense lawyer can help protect your rights and explore options like debt relief or settlement.
Common Causes of Business Debt Problems
Small business owners take on debt for many reasons. Here are some of the most common causes of problematic business debt:
- Funding growth – Loans to expand locations, inventory, marketing, etc. Growth is important but overextension can be dangerous
- Covering cash flow gaps – Borrowing to smooth timing differences between expenses and revenue
- Unexpected expenses – Debt from emergencies like equipment repairs or weather damage
- Predatory lending – Loans with excess fees, rates, or unfavorable terms
While business debt is often necessary, it can quickly become unmanageable. Warning signs include relying entirely on new debt to cover existing payments, late fees piling up, or lenders calling about missed payments.If your business struggles with debt, working with a lawyer can help you understand your rights and options. An experienced attorney can review your situation to spot any predatory lending practices. They can also advise you on defenses and debt relief programs that fit your needs.
Common Legal Defenses Against Problem Business Debt
If you face collections or lawsuits over business debt, several legal defenses may apply to your situation:
Unconscionability
- Unconscionable contracts are so one-sided they are considered unfair
- Factors like unreasonable terms/rates, lack of understanding, high pressure sales tactics
- If proven, courts may void or alter unconscionable contracts
Breach of contract
- Breach of contract defenses argue the lender broke agreed upon terms
- Common claims include deceptive interest rates, failure to disclose key terms, or harassment/deceptive collections practices
- May allow contract to be voided or entitle business to damages
Statute of limitations
- Legal time limits on when lenders can sue for repayment
- Time periods range from 3-6 years depending on contract type
- If passed, business may avoid lawsuits from older defaulted debt
Business Debt Settlement
Debt settlement is a process where a business negotiates directly with lenders to reduce balances owed. It provides an alternative to bankruptcy or continued collections.Here’s how the debt settlement process typically works:
1. Stop making payments
Business stops paying and directs income into secure account instead
2. Portfolio review
Attorney reviews all business debt contracts and negotiates with lenders
3. Settlement offers
Lenders offered lump sum settlements for 30-50% of balances
4. Resolution
Settled accounts closed and reported as “Paid in Full”Settlements allow business owners to resolve debt they can’t afford to pay in full. And by stopping payments upfront, leverage is created for better settlement offers.However, settlement also comes with risks like damage to business credit or potential lawsuits. Working with an experienced attorney can help navigate settlements while avoiding pitfalls.
Finding the Right Columbus MCA Defense Lawyer
If your Columbus business struggles with overwhelming merchant cash advance (MCA) debt, finding an attorney you trust is crucial. Here are important things to look for:
Specialized experience
Not all lawyers fully understand the MCA industry or relevant case law precedents. Seek out attorneys with specific experience defending against MCA lenders.
Holistic advice
The best lawyers don’t just fight lawsuits in court. They explore defenses while also providing practical advice on managing cash flow, improving business practices, and avoiding future debt problems.
Reasonable fees
Attorney fees should be affordable and tied directly to results achieved for your business. Ethical lawyers focus on your best interests, not maximizing their fees.The team at Delancey Street has extensive experience representing Columbus small business owners against MCA lenders. Over the past 10+ years, we’ve helped clients fight back against predatory lending practices while settling millions in harmful debt. And we only charge fees based on savings achieved through debt reductions or dismissed lawsuits.
The MCA Industry and Predatory Lending Concerns
To understand legal defenses against MCA loans, it helps to know where merchant cash advances come from and how the industry works.MCA loans provide quick financing by purchasing a share of future credit card sales. Payments automatically deduct as a percentage of daily volumes until the purchased amount plus fees gets repaid.Below are some details on the MCA industry:
- Created to fund small businesses unable to qualify for bank loans
- Provides fast approvals with minimal documentation required
- Approval decision based almost entirely on credit card sales volumes
- Costs structured as fixed daily repayment amounts rather than interest rates
- Very little regulation compared to consumer lending
This combination of easy approvals and limited oversight has led many lenders to take advantage through predatory practices like:
- Pushing excessive loans resulting in unmanageable repayment burdens
- Overreliance on limited sales data without considering total debts or actual cash flow
- Rushing through due diligence and obfuscating key repayment terms
- Harassing business owners struggling to make daily payments
While MCA loans provide legitimate funding for some, loose regulations and perverse incentives have also enabled many predatory lenders. Understanding legal defenses can help protect against these bad actors.
Common MCA Defense Strategies
When facing lawsuits or aggressive collections from MCA lenders, several legal arguments may form the basis of your defense:
Unconscionability
- Argue one-sided nature of MCA agreements is unfair
- Point to excessive rates/fees, misrepresented terms, high-pressure sales
- If accepted, courts can alter or void unconscionable contracts
Breach of good faith
- Lenders expected to deal ethically and transparently
- Claim deceptive sales tactics or collections practices
- Seek contract changes or damages for lender misconduct
Breach of fiduciary duty
- In some states, lenders have fiduciary duties to small business clients
- Argue lender didn’t properly disclose risks or aligned with your interests
- May void contract or lead to damages award
Statute of limitations
- Legal deadlines range from 3-6 years for written contracts
- Defaulted MCA loans past time limits can’t be collected through lawsuits
- Immediately halts legal collections efforts on old debts
Using MCA Defense Lawyers to Dispute Debts
Fighting back against unlawful collections requires understanding complex laws and legal precedents most business owners don’t have. MCA defense lawyers level the playing field by putting their expertise to work for you.Benefits of legal help with MCA disputes include:
- Case review – Audit loan contracts to spot deficiencies like hidden terms, misrepresented rates, or deceptive sales practices
- Negotiations – Leverage identified weaknesses to push for reduced settlements
- Court representation – Defend against lawsuits by raising unconscionability, breach of contract, and other claims
- Advice – Provide guidance on improving business practices to avoid repeat situations
The Delancey Street legal team has extensive experience representing clients in disputes with MCA lenders. Over the past decade, we’ve helped clients fight back against unlawful collections and predatory lending practices. Our track record includes negotiating reduced payoffs and defending dozens of lawsuits on behalf of small businesses.
