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 are often predatory and can leave business owners trapped in cycles of high-interest debt. If you took out an MCA and are now facing aggressive collection attempts or even threats of criminal charges, you need an experienced legal team on your side.

How MCAs Work and Why They Can Be Problematic

A merchant cash advance provides an upfront lump sum to a business in exchange for a percentage of future credit card sales. There are typically no fixed monthly payments. Instead, the MCA company takes a set percentage of daily credit card receipts until the advance has been repaid in full plus fees and interest equivalent to an annual rate over 50-90%.This open-ended structure allows companies to extract 2-3X the original advance amount. Businesses can quickly find themselves owing far more than they anticipated. The contracts also often contain hidden fees and traps that enable the MCA provider to declare default for even minor infractions.Once in default, the business loses any protections against excessive charges. The MCA company can then clean out the merchant account and employ aggressive collection tactics like:

• Harassing the business owner
• Freezing bank accounts
• Filing police reports alleging fraud/theft
• Threatening criminal charges

These underhanded strategies frequently push struggling companies into bankruptcy. The business winds up shuttered, and the owner’s credit ruined over what began as a straightforward financing arrangement.

MCA Companies Abuse the Legal System

Merchant cash advance companies often turn to dubious legal maneuvers when collecting on debts:

• Filing baseless police reports – MCA contracts require business owners to commit a percentage of credit card sales as repayment for the cash advance. Despite this contractual arrangement, MCA companies will often file false police reports alleging theft or fraud when payments start falling short. They take advantage of the criminal justice system to intimidate business owners into paying, even if the debt is contested.
• Threatening owners with arrest – MCA collectors frequently warn business owners they may face arrest or jail time over breach of contract civil disputes. While failure to honor a contract can theoretically spur criminal proceedings in extreme cases, legitimate lenders virtually never pursue this option over standard business financing deals.
• Freezing bank accounts – MCA companies have also been known to freeze business bank accounts through questionable legal filings. They cut off access to operating capital without warning, jeopardizing the company’s ability to function on a day-to-day basis. This strong-arm tactic often leaves owners with no choice but to pay up, regardless of whether the debt amounts are accurate or fairly calculated.

Learn more about merchant cash advance scams…

MCA Collection Efforts Frequently Cross Legal Boundaries

Merchant cash advance arrangements occupy a largely unregulated space in financial services. This lack of oversight enables predatory behavior from MCA providers, both in the original terms of the agreements and especially once accounts become delinquent.In particular, the collection tactics frequently used against business owners with outstanding MCA debts cross ethical and legal lines:

• Deceptive demands – MCA companies often misrepresent the actual balance owed. For example, they may fail to properly credit payments made, charge unlawful fees, or otherwise inflate the sums due. Yet they will still demand full repayment of these fabricated totals and pursue charges like fraud if the business refuses.
• Unlawful threats – MCA collectors routinely threaten struggling business owners with criminal charges and jail time solely to coerce payment on outstanding cash advance debts. But failure to pay a civil financial obligation is almost never sufficient grounds for actual criminal prosecution.
• Aggressive collection calls – MCA providers are known to harass commercial borrowers with relentless phone calls making false threats of arrest, lawsuits, and other consequences. This intentional infliction of distress is unethical and frequently rises to the level of illegal abuse.

• Financial attacks – Defaulting on an MCA can prompt collectors to unlawfully freeze company bank accounts and credit cards. This disrupts critical business activities and essentially holds the borrower hostage – they must pay up or lose access to operating capital and watch their company fail.

Learn about illegal debt collection practices…

Fighting Back Against Abusive MCA Tactics

If you are facing harassment, financial disruptions, or threats of jail over an unresolved merchant cash advance, you have legal options:

• Seek experienced legal help – An attorney well-versed in MCA agreements can often resolve disputes through negotiation before matters escalate to court action. They can also defend you if legal proceedings do become necessary.
• Carefully review the MCA contract – Predatory language buried in the fine print may render all or part of your agreement invalid. This could nullify some debts claimed against you. An attorney can identify any unlawful provisions.
• Challenge inaccuracies – If the MCA provider has inflated the balance owed through fees and charges not contractually supported, a lawyer can demand an accounting and rectification of the outstanding amounts.

• Report collection harassment – If MCA collectors are employing abusive and aggressive tactics against you, an attorney can bring this illegal behavior to the attention of regulators and urge corrective action. You may also be able to file civil claims for financial relief.
• Protect your accounts – If the MCA company tries to freeze your business accounts without proper evidence-supported legal filings, you can petition to regain access on emergency grounds. An experienced lawyer can request immediate relief.

Get advice on dealing with predatory lenders…

Negotiating Debt Relief

We will thoroughly review your merchant cash advance agreement to validate the true amount owed. If the MCA company has inflated the balances through improper fees or other bogus charges, we demand a full accounting and reconciliation.Where feasible, we directly negotiate fair settlements beneficial to our clients. If talks break down, we take aggressive legal action to protect our client’s interests.

Defending Against Abusive Collections

Should MCA collectors begin harassing you with excessive calls or unlawful threats of jail time, our lawyers quickly step in to halt abuse. We also formally notify regulators, requesting intervention against offending companies.If collectors have disrupted access to your bank accounts or credit cards, we petition courts for emergency relief while investigating regulators’ options against such financial attacks.