Montana MCA Defense Lawyers
Introduction
If you’re dealing with Merchant Cash Advance (MCA) debt, here’s how an MCA defense attorney can win—or at least protect your business from severe financial fallout. Let’s break it down with real-world examples and legal facts.
MCA Contracts Are Not Loans
First off, MCA contracts are not technically loans; they’re classified as sales of future receivables. That distinction helps MCA lenders avoid usury laws, which cap interest rates. But the game changes when a court views the agreement as a loan.
Case Example: Craton Entertainment, LLC v. Merchant Capital Group
For example, in Craton Entertainment, LLC v. Merchant Capital Group, a Florida court ruled that the MCA was not a loan, and thus not subject to usury laws. The court stated that the repayment was contingent on business success—key in avoiding loan classification.
Usury Law Claims
But here’s where it gets interesting: Some courts have held that if the repayment terms are too restrictive or if there’s an absolute repayment obligation, then the MCA could be recharacterized as a loan, opening the door to usury law claims.
Personal Guarantees in MCA Contracts
Another crucial point? Many MCAs include personal guarantees, which put your personal assets on the line. But did you fully understand what you were signing? Attorneys can challenge these if they’re found to be deceptive or unclear.
Case Example: R&J Pizza v. Merchant Cash & Capital
In R&J Pizza v. Merchant Cash & Capital, the court determined the agreement was a true sale, not a loan, because the receivables were sold without recourse if the business failed. This precedent can help an MCA defense lawyer argue that you don’t owe as much as the lender claims.
Confession of Judgment Clauses
Many MCA contracts also have confession of judgment clauses, which let lenders get a judgment without a court hearing. But courts are now scrutinizing these, and attorneys can challenge them in cases where merchants were misled.
UCC Liens
Let’s talk about UCC liens. MCA companies often file these liens against your business assets, giving them the right to seize property. However, an attorney can fight these liens if they were improperly filed or if the contract was deceptive.
Case Example: Shoot the Moon v. CapCall
In Shoot the Moon v. CapCall, the court found that the MCA’s sweeping protections and personal guarantees made it more like a loan. If an MCA defense lawyer can argue that the lender overstepped, the UCC lien could be invalidated.
Jurisdiction Issues
Jurisdiction is another battleground. MCA lenders often file lawsuits in states that are friendly to them (like New York or Florida), but your attorney can challenge this if the venue is unfair or burdensome for your business.
Service of Legal Documents
A big win for MCA defense attorneys is when they can prove the MCA company didn’t properly serve you legal documents. If you never received them, the case could be dismissed. But don’t ignore the lawsuit—it can lead to default judgments.
Negotiating Settlements
Even if a court sides with the MCA lender, it’s not game over. Attorneys can still negotiate settlements to reduce what you owe or restructure the debt to save your business. These negotiations can protect your assets and limit your liability.
Filing Counterclaims
In some cases, filing a counterclaim against the MCA lender is a strong defense strategy. If the lender interfered with your business or violated state or federal laws, your attorney can sue them back.
Partial Wins Matter
Partial wins matter, too! Even if the MCA isn’t dismissed, attorneys can help release personal guarantees, reduce debt, or get liens removed—all of which save you money and protect your business.
MCAs and High-Risk Repayment Schedules
Fact: MCAs are often structured with high-risk repayment schedules. If your business fails, repayment is still required—but not always. This is where your attorney steps in to challenge whether your specific agreement violated your rights.
Case Example: New York Court Rulings
For example, courts in New York have ruled that MCAs are not loans, but attorneys can argue that if the lender treated it like a loan (with strict repayment), then usury laws should apply. This could drastically reduce your debt.
Spotting Issues in MCA Contracts
MCA defense attorneys also know how to spot issues like incorrectly calculated fees, vague terms, or hidden costs. If they find these issues, they can argue for reduced debt or even dismissal of the case altogether.
Hire an Experienced MCA Attorney
Want to protect your business? Hire an MCA attorney who understands these laws, precedents, and the tricks lenders use to trap business owners in debt. With the right legal help, you can fight back and win—even if it’s a partial win.
Takeaway
Takeaway: MCA contracts are complex, but the right defense strategy can prevent you from losing your business or personal assets. Consult an experienced attorney who can navigate these waters and put you on the path to recovery.
Bottom Line
Bottom line: Don’t face an MCA lawsuit alone. Legal precedent shows that skilled MCA defense attorneys win by challenging unfair terms, reducing liabilities, and protecting your business. #MCADefense #BusinessLaw