Wichita MCA Defense Lawyers Business Debt Relief
If you run a small business in Wichita, chances are you’ve heard about merchant cash advances (MCAs) as a financing option. MCAs provide fast access to capital by essentially selling a portion of your future credit card sales in exchange for an upfront lump sum. However, MCAs often come with extremely high interest rates and aggressive collection tactics if you fall behind on payments. This is where an experienced Wichita MCA defense lawyer can help.
How MCAs Work
Merchant cash advance companies provide capital in exchange for a percentage of your future credit card and debit card sales. There is no set repayment schedule – instead, the MCA takes a fixed amount from your daily credit card receipts. For example, they may take 15-20% of your daily sales until the full amount plus fees and interest is repaid.The advantage is fast access to capital without requiring good credit or collateral. However, the costs are exceptionally high, with annualized interest rates often exceeding 100-200%. And if your business has a slow period and can’t make the daily payments, the interest keeps accruing, digging you into a deeper hole.
Aggressive Collection Tactics
If you fall behind on MCA payments, collection efforts ramp up quickly. The MCA company knows all of your banking and credit card processing information, giving them a lot of leverage. Common aggressive tactics include:
- Freezing business bank accounts
- Withholding access to credit card receipts
- Harassing calls to your customers about unpaid debts
- Filing confessions of judgement to seize assets
They can essentially cripple your business operations with little warning. An experienced attorney can help respond to improper collection efforts.
MCA Defense Lawyers Provide Critical Help
Having an attorney on your side levels the playing field when dealing with predatory MCA tactics. Defense lawyers have experience negotiating settlements on favorable terms for the business owner. They also defend against abusive collection practices to keep your business operating.Specific ways a Wichita MCA defense attorney can help include:
- Reviewing MCA agreements to find unlawful provisions
- Disputing improper confessions of judgement
- Filing complaints about deceptive business practices
- Negotiating reduced payoff amounts
- Structuring affordable long-term repayment plans
- Defending against harassment and improper freezing of assets
- Advising when bankruptcy may be an option
Don’t wait until your accounts are frozen or assets seized. Consult an attorney as soon as you anticipate falling behind on payments. Timely advice can save your business.
Beware MCA Scams
Unfortunately, the MCA industry has also attracted its share of outright scammers claiming to provide financing. Typical scams include:
- Fake MCA companies that disappear after collecting upfront fees
- Altering repayment terms after money has changed hands
- Forging business owner signatures on contracts
- Selling MCA agreements to multiple funders without disclosing
Reputable MCA funders should be transparent about all terms and fees. Never pay upfront or sign a contract without understanding all details and obligations. And consult a lawyer right away if you suspect fraud.
Business Debt Relief Options Beyond MCAs
If an MCA has buried your business in unsustainable high-interest debt, debt relief may be an option. Business debt relief diffes from personal debt relief in allowing more tools to restructure and negotiate debt. Business debt relief options include:
Debt Consolidation Loans
Banks and alternative lenders provide consolidation loans allowing you to pay off MCAs and credit cards with lower fixed interest rates. This simplifies payments into a single monthly loan bill. While you still repay the full balance, it is over a longer term with lower interest.
Business Debt Settlement
Debt settlement involves negotiating directly with creditors or through a debt relief company to pay a lump sum lower than the balance owed. This requires stopping payments, allowing debts to become delinquent, then negotiating a reduced “settlement in full” payment. This damages credit but eliminates debt.
Chapter 11 Bankruptcy
Chapter 11 allows restructuring debts under court supervision. Existing assets aren’t liquidated. Instead, a repayment plan is created, allowing the business to continue operating. Taxes, employee wages, and secured debts are paid first. Unsecured debts like MCAs may only receive a percentage of what is owed.
