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MCA Defense Lawyers Business Debt Settlement

Merchant cash advance (MCA) loans have become an increasingly popular way for small businesses to access quick financing. However, some MCA lenders engage in predatory practices that can leave business owners saddled with crushing debt. If you are struggling with MCA debt, working with an experienced defense lawyer can help protect your business.

The Risks of MCA Loans

MCA loans provide fast access to capital by allowing businesses to sell a portion of their future credit card sales for an upfront lump sum payment. This can help businesses cover short-term cash flow issues. However, there are several risks to be aware of:

• Exorbitantly high effective interest rates – Rates can exceed 100-200% APR when fees are factored in. This makes the loans very difficult to pay off.
• Daily repayment structure – You pay a fixed percentage of daily credit card sales back to the MCA company until the balance is repaid. This can drain cash flow very quickly.
• Personal guarantees – Business owners often have to personally guarantee the loans, meaning the MCA company can go after personal assets for repayment.

As a result, many businesses fall dangerously behind on MCA loan payments. The MCA companies can then freeze bank accounts, garnish wages, and even force businesses into bankruptcy.

How Defense Lawyers Can Help

If you are facing aggressive collection efforts from an MCA lender, a defense lawyer can be invaluable. A lawyer can help in several key ways:

• Negotiating Settlements – An experienced lawyer can often negotiate much more favorable settlement terms compared to trying to work directly with the MCA company. This may involve reducing the overall repayment balance or changing the repayment structure.

• Uncovering Unfair Lending Practices – In some cases, MCA companies have engaged in unlawful lending tactics like misrepresenting repayment terms or charging rates above state limits. A lawyer can investigate and build legal arguments around any violations.
• Defending Against Lawsuits – If an MCA lender sues your business, a defense lawyer can protect your interests in court. This may involve contesting improper contracts or erroneous default judgments.

• Preventing Personal Liability – A lawyer may be able to structure a settlement or court order so repayment is limited to business assets only. This shields your personal finances.

• Exploring Bankruptcy Options – While bankruptcy can be a last resort, an experienced business bankruptcy lawyer can guide you through the process if needed to eliminate suffocating MCA debt.

Choosing the Right Defense Attorney

Not all defense lawyers have in-depth experience dealing with complex MCA loan cases. When researching attorneys, you want to look for:

• Specific MCA Defense Experience – Ask about the number of MCA cases they have handled and what the outcomes tended to be. An experienced MCA defense lawyer will have established strategies.

• Business Law Background – Understanding the nuances of business contracts and finance is key. You want someone well-versed in state business and lending laws.
• Willingness to Litigate – The top lawyers won’t hesitate to take MCA companies to court if you have a strong case. Be wary of lawyers who seem overly eager to settle.

• Transparent Fees – They should clearly explain their rates and fee structure upfront so you know what to expect. Top lawyers work on a contingency basis.

The MCA Defense Process – What to Expect

If you decide to move forward with an MCA defense lawyer, here is an overview of what typically happens:

1. Case Review – The lawyer will conduct an in-depth review of your MCA contracts and financing history to identify potential violations or unfair terms.
2. Settlement Negotiations – They will first try to negotiate a reasonable settlement with the MCA company. The goal is to reduce the repayment balance and avoid litigation.
3. Litigation Preparation – If negotiations fail and the MCA company continues aggressive collection efforts, your lawyer will assess if you have grounds for a strong legal case. This may involve collecting evidence and identifying causes of action.
4. Litigation – Your lawyer will then work to resolve your case through the court system. The ultimate goal is to invalidate the MCA contract, eliminate or reduce the debt burden, and stop collections activities.
5. Settlement – Even during litigation, many cases end up settling. But your lawyer is now negotiating from a position of strength. Settlements reached during litigation tend to be much more favorable compared to early settlements.

The typical timeline can range from 2-3 months for quick settlements up to a year or more if the case goes to trial. Your specific situation will determine how quickly a resolution can be reached.

Costs of MCA Defense Lawyers

Hiring a qualified MCA defense lawyer is an investment into saving your business. There are several typical fee structures:

• Hourly Rate – Some lawyers simply charge an hourly rate. Rates for experienced business lawyers tend to range from $200-$500+ per hour.
• Flat Fee – Other lawyers charge a pre-determined flat fee based on the services being provided. Simple settlement negotiations may cost a few thousand dollars. Extensive litigation could cost tens of thousands.
• Contingency Fee – The most common option. The lawyer only collects if money is recovered, taking an agreed-upon percentage (often 30-40%).

Also, some lawyers are willing to defer legal costs until after a settlement is reached. This avoids any upfront out-of-pocket expenses.While legal fees can seem intimidating, a good lawyer should be able to recover significantly more money than what you pay them. Settling MCA cases often frees up massive cash flow for businesses. An experienced lawyer maximizes these savings through their expertise.