Construction Business Debt Relief
Let’s talk in great detail about Construction Business Debt Relief, which I have seen as a big problem for many small and medium-sized business owners who have been taken advantage of, and how these MCA lenders, who often operate in ways that seem predatory, are basically sinking entire businesses into never-ending debt that makes it nearly impossible for them to escape without legal help. And trust me, when I say that I’ve seen it firsthand, I truly mean that I’ve watched business owners drowning and struggling under the weight of the high-interest payments because of these predatory lenders who seem to have no sympathy for the hard-working people they are hurting. MCA lenders try to make themselves look like rescuers or helpful sources, but the truth is, they aren’t in it for your benefit; they’re just looking for profit. They give you fast cash, and they make it seem like it’s a great deal on the surface, but the hidden costs? The price? It’s astronomical—a trap that’s hard to escape from. They often rely on something called confession of judgment clauses, which is a complete legal disaster that can ruin a business’s financial future without the owner even realizing what’s happening until it’s too late!
Have you heard of the New York Civil Practice Law & Rules (CPLR) § 3218? This law, which is specific to New York, is something that these lenders love to use against business owners because it gives them an unfair legal advantage. Yeah, it’s the tool they rely on because this law lets them file a judgment against your business without even telling you first, so you don’t get a chance to defend yourself in court. So, one day you’re working hard, running your business, thinking everything is fine, and the next day, BOOM, your bank accounts are frozen, and you have no idea why, until it’s too late, and you realize that an MCA lender has already secured a judgment against you behind your back, leaving you with few options.
Partial Wins in New York
This confession of judgment clause that I just mentioned is everywhere in these MCA contracts, meaning it’s in almost every MCA agreement that these lenders make businesses sign, but thankfully, the law has recently been changed to offer more protection. In 2019, New York, after seeing how harmful these clauses were to businesses, limited the use of these confessions in MCA contracts when the business involved is located outside of the state of New York. See? That’s a win for business owners—a partial win, yes, but still an important one that MCA defense lawyers can now use in court to help their clients. That 2019 change, known as Chapter 747 of the Laws of New York, specifically provides protections for out-of-state business owners by making it harder for MCA lenders to use confessions of judgment to trap them without warning. This is exactly the kind of law that MCA defense lawyers like myself use to stop these lenders from freezing assets, which can be the difference between a business surviving or going under completely.
Here’s another huge problem that MCA lenders exploit: they call the arrangement a sale of future receivables instead of a loan, and they do this on purpose. Why do they do it? To dodge usury laws, which are laws that limit how much interest lenders can charge on loans. But defense lawyers like us know exactly how to challenge these contracts by using Article 9 of the UCC—that’s the Uniform Commercial Code—which governs secured transactions and how loans are supposed to work, and we can argue that it’s really a loan, not a sale.
How UCC Article 9 Comes Into Play
Article 9 of the UCC? Let me tell you, that’s a huge, important legal tool. It governs all secured transactions, meaning any time something of value is used as collateral for a loan or financial arrangement, it falls under Article 9. MCA lenders claim, falsely, that they aren’t subject to it because they argue they are “selling” receivables, not issuing a loan, but if your lawyer can prove that the transaction was truly a loan and not a sale of receivables, then we can challenge the interest rate under usury laws that apply to loans. In California, for example, MCA contracts can be challenged under the California Finance Lenders Law (CFL) if they’re shown to be high-interest loans that don’t follow the rules. These MCAs break Cal. Fin. Code § 22002 because they’re dodging lending regulations that are there to protect business owners from being charged sky-high interest rates. If your MCA contract’s interest rate is over 10% in California, it might actually be illegal under the state’s laws, and that’s a huge point that MCA defense lawyers like myself will jump on right away to defend you in court. And don’t think that this argument only works in California—it’s a valid argument in many states with usury caps, so it’s a tool we can use in lots of places.
Texas and Usury Law Defense
Now, if you’re in Texas, you’ve got a whole other set of state-specific laws that can protect you from these predatory lenders. Texas Business & Commerce Code § 306.001 defines the highest interest rates that can be charged on loans, and if MCA lenders try to push you past that legal limit, guess what? You’ve got a case for usury violations, and we can use that to fight back against the lender. I’ve seen this happen firsthand with my own clients. A contractor in Houston, who was working 70 hours a week trying to keep his business running, was being crushed by an MCA lender who was charging him a crazy 60% APR. We used Texas usury laws to argue in court that the rate wasn’t just high, it was actually illegal under Texas law. Was it a full victory? No. But was it a partial victory that gave him the relief he needed to keep going? Absolutely—a full win in my book because it saved his business from certain failure.
This is why MCA defense lawyers like myself focus on issues like misrepresentation and unconscionability in court. These are powerful legal concepts that can decide a case. Did the lender trick you into signing something without explaining it? Was the deal so unfair that it was clearly one-sided and harmful to you? Courts in many states, like Florida, will look at these terms closely to decide whether the contract is valid or should be voided.
The Power of Unconscionability in Florida
Florida Statutes § 501.204, which is part of Florida’s unfair and deceptive trade practices act, can be used to argue that MCA lenders tricked business owners into signing bad deals through shady practices. MCA defense lawyers have been winning cases in Florida by using this law, arguing that the lenders violated the trust of the business owners and used sneaky tactics to get them to agree to terms that were unfair. I personally handled a case in Miami where an MCA lender had hidden key contract terms in the fine print, making it almost impossible for the business owner to know what they were agreeing to. We used Florida’s consumer protection laws to challenge the contract as unconscionable, meaning it was so unfair and one-sided that it shouldn’t be enforceable, and we won partial relief for the business owner, which helped them keep their business going.
And Washington State? They have their own laws, including RCW 19.52.020, which limits the interest rates that can be charged on loans. MCA lenders try to get around these laws by calling their contracts a “sale” instead of a loan, but good lawyers see through that trick and know how to argue that it’s really a loan, which brings it under Washington’s usury laws. If the court agrees that the contract is really a loan, then the MCA could be in trouble for charging rates that are far too high.
MCA Defense: A Battle for Survival
Some of these battles take time, and I want you to know that, but what’s important is that MCA defense lawyers like me don’t stop fighting. Even when we only win partial victories, those small wins are huge because they can be the difference between a business staying open and closing its doors forever. I’ve personally handled many cases where we didn’t win back the full amount of money that was taken, but we were able to stop the MCA lender from continuing to bleed the business dry, which is often just as important. That’s a partial win, but guess what? It’s a win that keeps the business owner in business, which is the goal in the end.
Illinois has protections for business owners too. Under Illinois usury laws, specifically 815 ILCS 205/4(1), MCA lenders are capped on the interest rates they can charge on loans. If your lawyer can prove that the contract is really a loan, then the lender could be breaking these usury laws because they’ve been charging interest rates that are way too high under the law.
Success Stories in Illinois and Beyond
I had a case in Chicago where we successfully argued that the MCA was charging illegal interest rates, which was a clear violation of Illinois law. The judge ruled in favor of my client, limiting the lender’s ability to collect the full amount they were asking for. It was another partial victory—sometimes, that’s everything a business owner needs to stay open. You can see now why MCA lenders try so hard to avoid calling these contracts “loans.” They know the second that term is used, they’re at risk of breaking laws in so many states—New York, California, Texas, Florida, and the list goes on.
Another strategy MCA defense lawyers use is focusing on deceptive collection practices. Some states, like Massachusetts, have strict rules under Mass. Gen. Laws ch. 93A about what creditors can and can’t do when they’re trying to collect debts. These laws give business owners strong protections that can be used to stop unfair and aggressive collection tactics.
The Weapon of Deceptive Collection Practices
Massachusetts General Laws ch. 93A can be a powerful tool for business owners facing aggressive MCA lenders who are using shady practices to try to collect on the debt. If the lender used unfair or sneaky tactics to collect, they could face serious legal trouble, including the possibility that the contract could be voided altogether. This means the lender could lose their right to collect anything at all. So, when you’re feeling like all is lost because of an MCA contract, remember: there are defenses available to you. Your lawyer knows exactly which state laws to use to punch holes in these contracts, and MCA lenders might be good at trapping you with tricky terms and fine print, but we’re better at getting you out of those traps.
MCA defense isn’t just about tearing apart contracts—it’s about protecting your livelihood. Every single business owner I’ve helped has taught me the same important lesson: partial victories can save a business from closing its doors. Winning 20% of a case is far better than losing 100% of everything you’ve worked for, and sometimes, that’s what it takes to survive.
Michigan and Pennsylvania Defense Tactics
And what if you’re in Michigan? MCA contracts in Michigan can be challenged under Michigan’s Uniform Commercial Code (MCL 440.9102), which is part of the larger set of laws that govern secured transactions across the state. If your MCA contract breaks UCC rules, your lawyer can argue that the contract is invalid, and that could save you from having to pay the full amount demanded by the lender. Michigan courts have seen cases where MCAs push through illegal interest rates or include aggressive terms that are unfair to the borrower, and let me tell you, those courts don’t like it when lenders try to get away with these tricks. Lenders who break the UCC in Michigan often get smacked down by the courts, even if it’s only a partial win for the business owner.
One business owner I helped in Detroit was stuck paying insane fees to an MCA lender, and they thought they had no way out. We used Michigan’s UCC to argue that the contract was void because it didn’t follow the rules, and while we didn’t get everything back, the court cut the payments in half, which was a huge win for the business owner who was able to stay in business thanks to that relief.
Uncovering Flaws in Contracts
It’s important to understand that MCA defense is all about finding the flaws in these contracts. MCA lenders love to hide things in the fine print, to bury important terms in legal talk that the average business owner doesn’t have the time or knowledge to understand, but a good lawyer knows how to dig deep into those contracts and find the cracks. We find those cracks, we break them open, and we use them to defend you. Pennsylvania has its own laws too. Pennsylvania Loan Interest and Protection Law (Act 6) places limits on interest rates that lenders can charge, and if your MCA lender is charging more than the legal limit, guess what? You’ve got a case to challenge the contract.
Under Pennsylvania’s Act 6, I’ve seen judges side with business owners who were being crushed by illegal interest rates that no one should have to pay. MCA lenders thought they could get away with charging those rates, but spoiler alert: they couldn’t because we fought back with the law on our side.
Winning Even Partial Victories
When it comes to construction businesses, which often face special financial challenges because their cash flow can go up and down from month to month, these MCA contracts are even trickier because the terms don’t care about those ups and downs. MCA lenders don’t care about your cash flow or the natural changes that happen in a construction business—they want your money, now, even if it means destroying your entire operation in the process. The reason why MCA defense lawyers win is because we know the laws in each state, and we know exactly how to make them work for our clients. We use confession of judgment clauses, usury laws, UCC violations, and every other tool in our legal toolbox to fight back.
And when I say we win, I don’t always mean we get 100% of what we want. Sometimes a partial win—like reducing the payments or stopping a judgment from being enforced—is the difference between a business staying open or closing down for good.
The Power of Survival in MCA Defense
The truth is, MCA lenders think they’re untouchable because they hide behind these so-called contracts that they think are perfect, but the second we get into a courtroom, those contracts fall apart under legal review. Why? Because they break state and federal laws—laws that are there to protect business owners, and MCA lenders know they’re walking a fine line in many states. So, if you’re a construction business owner who’s buried in MCA debt and you feel like there’s no way out, don’t give up. Find a lawyer who understands the small details of MCA defense—someone who knows how to challenge these contracts under state laws that are there to help you.
At the end of the day, MCA defense lawyers like myself know that a partial victory is still a victory. It might not always be glamorous, and it might not always be what you dreamed of, but it’s enough to keep your business running—enough to let you live to fight another day.
Fighting for Business Survival
Remember, the law is on your side, and it’s there for a reason. MCA lenders are aggressive and relentless, but with the right lawyer on your side, you can push back and use the law to your advantage—whether it’s New York’s CPLR, California’s usury laws, Texas Business Code, or any other state’s laws. I’ve been doing this long enough to know that every case is different, but the main goal is always the same: save the business. And when you’re facing MCA debt, even a small victory can be the lifeline you need to stay afloat.
If you’re drowning in MCA debt, don’t let them take everything from you without a fight. Fight back. Get a lawyer. Use the law that’s there to protect you, and get the debt relief you deserve before it’s too late. Whether it’s a full win or just a partial victory, MCA defense is all about survival. And that’s exactly what construction businesses need right now in this fight—survival.