New Mexico MCA Defense Lawyers
Struggling with a Merchant Cash Advance (MCA) in New Mexico? You’re not alone. Let’s talk about how MCA defense lawyers can help you navigate and possibly win—even partially. MCAs are NOT loans. Instead, they’re agreements where you sell future receivables in exchange for upfront cash. Sounds simple? Not quite. But here’s where it gets tricky: MCA contracts can have unfair terms that favor funders. That’s where an experienced MCA defense lawyer comes in. Let’s dive into the legal tools they use.
UCC Liens and Legal Tactics
New Mexico’s UCC laws (Uniform Commercial Code) allow MCA funders to file liens on your receivables. This can freeze your accounts, stopping you from paying vendors or employees. Defending against UCC liens is one of the first steps an MCA lawyer takes. They use NMSA 1978, § 55-9-625 (Uniform Commercial Code), which governs UCC liens, to challenge the lien or negotiate its release. These liens often happen when businesses fall behind on payments. Lawyers challenge whether the MCA funder followed the UCC requirements. A partial win could mean unfreezing your accounts faster.
Confessions of Judgment (COJ)
Another issue? Confessions of Judgment (COJ). New York banned COJs in 2019 for out-of-state businesses. But funders might still use COJs under laws in other states like Utah or California. In New Mexico, MCA lawyers challenge COJs by arguing they violate public policy under NM Stat § 55-1-103. This law emphasizes fairness and good faith in business contracts. Why is this important? Because if a court agrees, it could dismiss or delay enforcement of a COJ. Even if it’s not a total win, delaying judgment gives your business time to recover.
Bankruptcy and MCA Discharge
Bankruptcy also comes into play. MCAs can be discharged in bankruptcy, which is rare for most business debts. Under Chapter 11 or Chapter 7, an MCA debt could be restructured or wiped out. Your attorney might use the precedent set in In re Rembert, 141 F.3d 277 (6th Cir. 1998), which looked at whether MCA debt can be treated as a dischargeable debt in bankruptcy. While not specific to New Mexico, In re Rembert sets a powerful argument for bankruptcy protection for businesses saddled with MCAs.
Usury Laws and Fraud Claims
Sometimes, MCA agreements violate usury laws. Usury is when the interest rate exceeds the legal limit. New Mexico caps interest rates at 15% for consumer loans—but MCAs often sneak around this. MCA lawyers in New Mexico argue that even though MCAs aren’t technically loans, if the contract acts like a loan, usury laws should apply. It’s a complex argument but can lead to reductions in the total amount owed. Another common argument? Fraud or misrepresentation by the MCA funder or broker. Did the broker promise a traditional loan but give you an MCA instead? That’s a legal red flag. Lawyers use NM Stat § 57-12-2, which prohibits unfair trade practices, to build fraud claims. If your attorney proves fraud, the court might void the entire agreement.
Penalty Fees and Unconscionability
Even partial wins matter. Reducing how much you owe, getting rid of unfair fees, or pausing collections can give your business time to recover. How about excessive fees? MCA contracts often have hefty penalty fees if you fall behind on payments. Under New Mexico contract law, attorneys argue that these penalties are “unconscionable.” Unconscionability is a defense that says the terms of the contract are so unfair, they shouldn’t be enforced. This can lead to fee reductions or voiding certain parts of the contract. One legal precedent is Williams v. Walker-Thomas Furniture Co., 350 F.2d 445 (D.C. Cir. 1965), which established that if a contract is too one-sided, it might not be enforceable.
Legal Strategy, Tactics, and Settlements
While not a New Mexico case, Williams v. Walker-Thomas Furniture Co. is often cited across states as an example of contract unconscionability. MCA lawyers use this to argue for more favorable terms. Timing is everything. If you’re sued by an MCA funder, your lawyer might use delay tactics to give your business time to build a defense or gather funds for a settlement. They might file motions to dismiss based on improper service of the lawsuit or question the jurisdiction. Delaying the case can sometimes push the funder to negotiate. MCA lawsuits often settle out of court. Settlement could mean paying a reduced amount, extending your repayment period, or removing unfair clauses. A partial win is still a win. Precedents like Hoffman v. United States, 266 F. Supp. 2d 27 (D.D.C. 2003) show how settlements in debt cases can avoid prolonged litigation and lead to better outcomes for businesses. Your MCA defense lawyer will fight for settlements that protect your business’s cash flow and keep the doors open.
MCA Defense: Protecting Your Business
MCA defense isn’t just about stopping lawsuits—it’s about protecting your livelihood. Whether through negotiation, settlement, or litigation, the goal is to get your business back on track. New Mexico MCA defense lawyers have several legal strategies at their disposal, from challenging UCC liens to contesting COJs and filing for bankruptcy protection. It’s about more than just fighting back. It’s about finding a path forward for your business. If you’re struggling with MCA debt in New Mexico, consider reaching out to a skilled MCA defense lawyer. They know the law and will fight to protect your business.