New Mexico Merchant Cash Advance defense Lawyers
Many business owners are caught in these high-cost traps. First, what’s an MCA? It’s not a loan—it’s an advance based on future credit card sales. MCA funders often disguise their terms. This leaves business owners with crushing debt and little flexibility. MCA contracts are built for funders to win. They control payments by deducting daily from your sales—whether you make them or not! This is where attorneys step in. They understand the nuances and can flip the script. New Mexico laws protect businesses more than you might think. Uniform Commercial Code (UCC) Section 9 covers secured transactions and can stop funders from freezing your accounts. Knowing how to leverage UCC is key.
Example: UCC liens can be challenged if the MCA company violated the terms. If your MCA company froze your receivables unlawfully, an attorney can have the lien dismissed. Case precedent? UCC 9-607 protects against improper seizures. Grant Phillips Law (a major MCA defense firm) has seen MCA contracts where interest rates hit 1,000% APR. These contracts are often unconscionable—meaning a court could invalidate them entirely. Want to know how New Mexico MCA lawyers fight? They attack the legitimacy of the MCA contract itself, often arguing that it violates federal laws like RICO (Racketeer Influenced and Corrupt Organizations Act). If they win here, your contract could be voided.
Confession of Judgment Clauses & Predatory Lending
And let’s not forget Confession of Judgment (COJ) clauses—these were banned in New York for out-of-state businesses but are still used in other states like New Mexico. An attorney will challenge these based on state laws. If your business is facing a COJ, they’ll argue it’s predatory lending. For example, if you weren’t served properly or the COJ wasn’t filed legally, courts can vacate the judgment, as in People vs. Richmond Capital Group. Want to avoid bankruptcy? MCA defense lawyers in New Mexico often negotiate debt restructuring with funders. By lowering daily debits, restructuring payments, or extending terms, they help you regain control.
Partial victories matter. Attorneys may not always get your debt dismissed entirely, but reducing the interest rate, extending the repayment period, or lowering the payment frequency can save your business. Take People v. Yellowstone Capital: This case showed how predatory MCA practices, such as excessive fees, can be challenged successfully. Lawyers use these precedents to win in New Mexico too!
Legal Tactics & Protection Strategies
Legal complexity rises when MCA companies stack advances—giving you multiple advances at once. New Mexico attorneys can argue usury (illegal lending practices) and get stacked advances reduced or dismissed. The Dramer Law Office also highlights that UCC liens are a major threat. Once these liens are filed, they can notify your customers, instructing them to pay the funder directly. Talk about damage! MCA attorneys can stop this in its tracks. Did you know MCA contracts often try to avoid state lending laws by pretending they’re not loans? In New Mexico, MCA attorneys challenge this by proving that MCAs are effectively loans subject to state laws.
Important case: LG Funding v. United Senior Properties (NY). The court ruled against the funder, saying that they couldn’t enforce MCA repayment under usurious terms. This case is often cited to protect businesses from unreasonable MCAs. The best attorneys dig into the contract language. If the MCA doesn’t provide a clear path for reconciliation or refunds if business slows down, that’s a major red flag. They’ll use this to argue the contract is unfair or unenforceable.
Emergency Actions & Settlements
How do attorneys stop MCA funders from debiting your account after default? They file an emergency injunction. This freezes any collection activity while the legal process takes place, buying you time. Law firms like Delancey Street offer holistic services—not just legal but also financial restructuring. They can negotiate new terms with funders or even pursue bankruptcy if all else fails. One of the most aggressive tactics MCA funders use? Judgments. If you’re sued by an MCA funder, don’t ignore it. Lawyers can often settle for far less before it even gets to court. Settling isn’t losing—it’s survival.
And if you’ve already been hit with a judgment? A good attorney can often get the judgment vacated—meaning it’s like it never happened. This is particularly common when a Confession of Judgment is involved. If your bank account has been frozen, attorneys can negotiate a release. Most funders don’t want to go to trial. Instead, they’ll agree to release funds in exchange for a negotiated settlement.
Challenging Default Judgments
Got hit with a default judgment? MCA defense lawyers will challenge the validity of service. If you weren’t properly served, they can get the judgment thrown out entirely. Weinberg Legal recently won a case like this in New York. In New Mexico, MCA attorneys often use Chapter 11 Bankruptcy as a strategy to restructure your business debt while keeping you operational. It’s not the end—it’s a fresh start. Let’s talk specifics: Bankruptcy Abuse Prevention and Consumer Protection Act (2005) adds more protection to businesses in bankruptcy proceedings. Attorneys use this law to negotiate with creditors, including MCA funders.
Worried about the personal guarantees you signed? MCA lawyers will argue that these were signed under duress or misrepresentation, and get them voided. Another trick? Some MCA contracts have illegal “stacking” clauses, letting funders claim multiple repayments on one income stream. New Mexico law frowns upon these practices, and attorneys can expose them in court.
Using Federal Laws to Your Advantage
Many business owners don’t realize MCAs are highly regulated. The Federal Trade Commission Act can be used to challenge deceptive MCA practices. MCA lawyers apply these laws to protect you. If you were misled about MCA terms, the funder might have violated Truth in Lending Act (TILA). MCA lawyers in New Mexico are skilled at finding these violations.
And let’s not forget: U.S. Bankruptcy Code Chapter 13 allows small businesses to reorganize and repay MCAs over time while protecting assets. It’s a common strategy used in extreme cases. New Mexico MCA lawyers don’t just fight in court. They’re expert negotiators too, often settling for pennies on the dollar before litigation even begins. It’s a game of leverage.