Nebraska MCA Defense Lawyers

Introduction: Understanding MCA Debt
Is MCA debt crushing your business? You’re not alone. But there are ways to fight back—and win—even if it’s just a partial victory. Let’s break it down! What’s a Merchant Cash Advance (MCA)? It’s when a business gets upfront cash in exchange for a percentage of future sales. But many businesses find themselves trapped in these tricky agreements. MCAs aren’t technically loans. Instead, they’re “purchases of future receivables.” This makes them tricky to handle legally—especially since usury laws (limits on interest rates) don’t always apply. MCA contracts often favor the lender, leaving businesses struggling. But here’s where the Uniform Commercial Code (UCC) and state laws step in—helping you protect your business from predatory practices.

MCAs vs. Traditional Loans
MCA attorneys frequently use UCC Article 9 to challenge liens placed on business assets. If the lender didn’t follow proper filing procedures, the lien can be invalidated. UCC liens can freeze your business’s receivables—impacting cash flow and causing reputational damage. MCA attorneys can challenge these liens and help unfreeze your accounts. Legal precedent matters! The Second Circuit Court of Appeals ruled against an MCA lender in 2023, classifying the MCA as a usurious loan, not a sale of receivables. This was a game-changer. Usury laws come into play if the MCA’s interest rate (when treated as a loan) exceeds the legal limit. In New York, the maximum rate is 16% annually under General Obligations Law § 5-501. Many MCAs violate this.

Key Legal Precedents
Another key precedent: In Pearl Capital Rivis Ventures v. RDN Construction, the court found the MCA agreement too ambiguous, allowing the business to void the contract. Daily payment defaults are common with MCAs. But an attorney can negotiate with the lender to pause or lower daily payments, helping you get breathing room. Frozen bank account? Attorneys can fight Confessions of Judgment (COJ), which are banned in New York for out-of-state businesses. If the MCA company didn’t disclose material terms, your attorney can sue for misrepresentation. This is a solid defense, especially when brokers make false promises.

Legal Strategies to Reduce Debt
MCA attorneys can challenge personal guarantees in court. Often, these guarantees are signed under false pretenses—allowing attorneys to negotiate better terms. Here’s a powerful move: Filing a counterclaim if your MCA provider violated any laws. This includes misrepresentation or breach of contract. A strong counterclaim can tilt the balance in your favor. The Second Circuit ruling I mentioned earlier? It’s the first major case to classify MCAs as usurious loans instead of sales of future receivables—setting a new precedent. Debt restructuring is another tool. MCA attorneys can renegotiate the contract terms—lowering the repayment amount or changing the frequency of payments (daily to weekly or monthly).

Challenging MCA Clauses in Court
In Cunningham v. Mercantile Group, the judge forced the lender to reduce excessive daily debits. This legal win gave the business owner much-needed breathing room. Here’s a key fact: MCA attorneys can void contracts if they find that the lender violated state-specific lending or consumer protection laws, like California’s Unfair Competition Law. Debt piling up? Attorneys can also consolidate MCA debts—putting everything into one manageable repayment plan. This can avoid the chaos of multiple daily withdrawals. Even partial victories matter. Attorneys often secure partial settlements, where the MCA provider agrees to reduce the total debt owed. This helps you pay off less than what you initially borrowed!

Unfreezing Assets and Avoiding Penalties
Attorneys can challenge UCC liens, proving they were improperly filed. If successful, this can unfreeze your receivables and bank accounts—giving you back control. Remember, litigation isn’t the only option. Attorneys often negotiate out-of-court settlements, avoiding the cost and time of a trial. This benefits both sides. Never sign any new agreement without consulting an attorney. Many MCA providers will try to sneak in restrictive terms, like Confessions of Judgment, into settlement agreements. Your attorney can request a Cease and Desist Order to stop MCA collectors from harassing you with phone calls and letters while you sort out the debt. A great attorney will leverage state usury laws to challenge excessive interest rates. This is especially strong in states like New York and California, where interest rate caps are tightly enforced.

Strategies for Reducing Fees and Penalties
Default fees piling up? Attorneys can negotiate to reduce or even eliminate late fees, stop payment fees, and default penalties—all of which add up fast with MCAs. Did you know that MCA attorneys can stop wage garnishments too? By fighting the court order, they can prevent the lender from garnishing your personal income. Courts are increasingly ruling against MCA providers in favor of businesses. It’s a growing trend, and a good attorney can use these precedents to your advantage. Many MCAs include hidden clauses. Attorneys carefully review these clauses and identify predatory lending tactics that can make your contract voidable. For instance, if your MCA lender stacked advances without proper disclosure, your attorney can challenge this in court, arguing the terms were unfair from the start.

Protecting Your Business Through Consolidation
Facing multiple lawsuits? An attorney can consolidate your cases, helping you avoid the stress of fighting on multiple fronts. This keeps legal costs down, too. Always document everything. Payment records, communication logs, and copies of contracts are essential for your attorney to build a solid defense. Confessions of Judgment (COJs) can be disastrous. If your MCA provider is trying to use one against you, an attorney can challenge its legality—especially if it was improperly executed. The Second Circuit ruling is a huge win for business owners because it redefines how courts look at MCAs. This precedent is now being cited in new cases across the country.

Using State Lending Laws to Challenge MCAs
Many MCAs can be treated as loans, and when this happens, they become subject to state lending laws—this opens the door for defenses like usury claims. Another key move: Filing for bankruptcy. MCA attorneys can often negotiate favorable terms or even discharge the debt completely if the MCA qualifies under bankruptcy laws. Be proactive! Don’t wait until your accounts are frozen. The earlier you involve an attorney, the better your chances of reducing or eliminating the debt. MCA attorneys are your shield against predatory funders who take advantage of small business owners. With the right legal strategy, you can turn the tables.

Consultation and Legal Support
Want to know your options? Many attorneys offer free consultations, so you can understand the path forward without committing upfront. Don’t hesitate to get advice!