Phoenix MCA Defense Lawyers

lawyerupsavann on October 13, 2024

Let’s talk Phoenix MCA Defense Lawyers, because if you’re a small business owner, there’s a high chance that at some point, either directly or indirectly, you’ve encountered or heard of Merchant Cash Advances (MCAs), which may have seemed like a solution to a cash flow problem but, in reality, are just financial traps. These traps are cleverly designed legal maneuvers disguised as assistance, when in fact, they are predatory debt machines set up with the sole intention of destroying you financially.

What I’ve learned from representing so many business owners who have been blindsided by these agreements is this: MCA lenders, whether they present themselves as your savior or a last resort, are nothing more than predators. Their entire business model revolves around burying you in debt with unfair terms you may not have realized you were agreeing to until it’s too late, and they’re already taking money out of your account every day. I’ve helped save businesses from the brink of financial ruin many times.

MCA Lenders Exploit Weaknesses in Laws

MCA lenders aren’t regulated like traditional banks, which have to follow consumer protection regulations. Instead, MCA lenders exploit Uniform Commercial Code (UCC) laws, using vague or weak areas to their advantage, twisting legal loopholes to wring every penny out of business owners, leaving them in financial devastation.

Let’s get one thing clear: An MCA is not a loan in the traditional sense. It’s an advance on future sales, where they lend you money now in exchange for a cut of future profits. Yet, they still attach usury-level interest rates. In Arizona, state law caps loan interest rates at 10% per year, but MCA lenders dodge that law by claiming their excessive rates are fees for buying future receivables, using legal trickery to exploit you.

Arizona’s Laws and Loopholes

Arizona law is not as strict as it should be with MCAs because lenders claim they aren’t offering loans. They argue that they’re selling financial products, exempting them from Arizona’s usury law restrictions. MCA contracts are designed to avoid the laws, but they’re simply playing with words.

But here’s where we step in: If MCA lenders exploit this loophole, we can argue these advances are nothing more than disguised loans. In Cohen v. Chase Mortgage, the court determined that if a financial agreement looks, operates, and functions like a loan, then it’s a loan, and usury laws must apply.

Unfair MCA Terms Harm Business Cash Flow

In an MCA contract, if your sales drop—whether from a slow season, market conditions, or something beyond your control—the lender still expects daily payments, which can be disastrous for your cash flow. Instead of using your sales for operating costs, you’re forced to give that money to the MCA lender.

We use an unconscionability defense to attack these excessively one-sided terms. Under Arizona contract law, when a contract is unfair, the court can void the terms. One of the sneakiest tactics lenders use is the Automatic Debit Agreement, allowing them to take money from your bank account daily. Arizona Statute ARS § 47-9604 regulates the use of secured property, including funds, and we can argue that MCA’s automatic withdrawals misuse secured property.

Arizona’s Consumer Protection Laws and MCA Deceptive Practices

We can also look at New York v. Richmond Capital Group, where a New York court ruled against a predatory MCA lender for deceptive practices. This ruling has impacted cases nationwide, including Arizona, where we can argue that MCA’s practices violate Arizona’s consumer protection laws.

Arizona’s ARS § 44-1522, the Arizona Consumer Fraud Act, allows us to argue that MCA lenders misrepresented their product, making you believe it was a receivable purchase when it was a loan in disguise, harming you financially.

Substance Over Form

Courts are increasingly seeing through MCA’s “it’s not a loan” defense. In LDP Enterprises v. CreditCash (California), the court recognized that substance over form matters. Even if a contract says “sale of future receivables,” if it looks, operates, and behaves like a loan, it’s a loan.

Let’s talk about personal guarantees, a dangerous trap in MCA contracts. These guarantees mean your personal assets—everything you own, including your house, car, and savings—are on the line, not just your business’s assets. Under Arizona’s limited liability company laws, business owners are typically protected, but MCA lenders strip away those protections. In these cases, we argue duress, meaning you had no choice but to sign because of the desperate situation.

Confessions of Judgment

MCA lenders also include confessions of judgment in their contracts, meaning if you default, you lose the case in court without a trial. Arizona doesn’t automatically enforce confessions of judgment, but lenders try to sneak them into contracts, hoping you won’t realize. ARS § 12-1584 helps us fight any attempt to enforce these in Arizona.

Stacking MCAs and Unjust Enrichment

Another tactic lenders use is stacking multiple MCAs, ensuring you’ll default because no business can survive under several high-interest advances. Arizona law allows us to argue that this creates unjust enrichment for the lender, and we’ll hammer this point in court.

In some cases, we use a fraudulent inducement defense, arguing that the MCA lender made false promises during contract negotiations. ARS § 44-1991 covers securities fraud, and if we show the lender’s misrepresentation, it opens another attack angle.

 

Ohio MCA Defense Lawyers

lawyerupsavann on October 13, 2024

Ohio business owners, who work tirelessly to build their companies, should be extremely cautious and on the lookout for MCA lenders—yes, those infamous Merchant Cash Advance predators who are notorious for targeting and taking advantage of hard-working business owners like you by exploiting legal loopholes in lending practices. These predatory lenders are actively seeking opportunities to swoop in and seize your hard-earned cash and profit by using unfair tactics that burden your business with outrageous fees and suffocating repayment terms. Let’s dig deeply and thoroughly into how dedicated and passionate Ohio MCA defense lawyers, who genuinely care about protecting business owners, fight back aggressively against these unfair and unjust lending practices. These lawyers work to win cases either partially, when necessary, or fully, when possible, but always with a strategic and methodical approach based on a deep understanding of Ohio’s state laws, historical legal precedents, and the complex tactics that are used in the courtroom. Ohio’s strict usury laws, which are designed to protect borrowers from lenders who charge excessively high interest rates, serve as one of the foundational pillars in defense cases. Under Ohio Rev. Code Ann. § 1343.01, the state of Ohio has capped general loan interest at 8% unless other specific terms are agreed upon and specified in the contract, which gives borrowers some level of security and protection.

However, despite this law, MCA lenders sneak through a legal loophole in the system by claiming that their so-called financial agreements are not technically classified as “loans.” Instead, they argue that they’re merely “purchasing future receivables,” which is their way of trying to dodge and evade those important interest rate caps that normally apply to loans and protect business owners from exploitation. But, in reality, Ohio MCA defense attorneys, who are seasoned in fighting these predators, don’t let these deceptive lenders get away with such underhanded tricks. They aggressively push back in court by challenging the legal definitions and fighting to have MCAs classified as loans, which brings them under the protection of state usury laws. Past rulings matter, especially in cases like these where businesses are at risk, and Ohio courts regularly look to past legal decisions, such as the influential case of Champion Auto Sales, LLC v. Pearl Beta Funding, LLC (2017). In this New York case, which has become a crucial reference point, an MCA deal was ultimately ruled to be a loan, and this ruling was significant because it set a valuable precedent. The court found that the MCA lender acted more like a traditional lender, rather than a purchaser of receivables, and Ohio lawyers now use this precedent to frame their arguments and build their cases around the same legal principles.

Shifting Classification & Fees

This important shift in classification is crucial because it allows Ohio attorneys to apply the powerful protection of usury laws, which are designed to prevent predatory lenders from taking advantage of businesses by charging devilishly high interest rates, which regularly hit triple digits in some cases, leaving businesses drowning in debt. When courts recognize these rates for what they are—predatory lending, plain and simple—Ohio MCA defense attorneys can push for relief. To add more insight, in Fleetwood Services v. Complete Business Solutions Group, Inc., the court found that the MCA deal was, in fact, a loan because the lender had too much control over repayments and terms, which made it function as a traditional loan rather than the sale of future receivables. This case, like the one before, is leveraged by Ohio MCA defense attorneys to argue similar points and provide legal protection for vulnerable business owners.

  • Let’s talk about personal guarantees—those hidden traps that MCA lenders love to sneak into contracts in order to trap business owners and force them into dire situations.
  • These personal guarantees essentially mean that, when your business is no longer able to make its payments because of the overwhelming repayment demands, the MCA lenders come after your personal assets—your home, your car, your savings—everything you’ve worked hard to build.
  • Thankfully, Ohio defense lawyers, who understand the emotional toll this can take on business owners, regularly get personal guarantees thrown out and dismissed from the case.

Ohio’s statute of limitations on debt collections can also come into play as a crucial defense tool. For written contracts, the statute of limitations is 8 years under Ohio Rev. Code Ann. § 2305.06, which essentially means that if the MCA lender hasn’t taken action within that 8-year timeframe, they lose their legal right to enforce the debt. And, believe it or not, MCA lenders often miss this window due to their disorganized and sometimes predatory practices. Ohio MCA defense lawyers skillfully use this to their clients’ advantage, successfully preventing lenders from collecting on debts that are legally unenforceable.

A Personal Story

Here’s a personal story from my experience: I represented an Ohio small business—let’s call them “X Construction.” They were a local family-run construction company that had been drowning in a $150k MCA debt due to the overwhelming daily repayment requirements. The lender had locked them into harsh repayment terms that left the business unable to keep up with the payments, but there was a silver lining. The MCA contract wasn’t properly disclosed under the federal Truth in Lending Act (TILA) laws, which require clear and accurate disclosures of loan terms. We carefully analyzed the contract and shredded it in court based on this violation. MCA lenders hate Ohio’s Consumer Sales Practices Act (CSPA) under Ohio Rev. Code Ann. § 1345.01, which is typically applied to protect consumers in the sale of goods and services, but clever and strategic attorneys have found ways to apply it when MCA lenders violate fair business practices by misleading business owners. MCA defense lawyers file lawsuits under this statute when lenders engage in deception and fraud.

When it comes to excessive fees and penalties, Ohio courts have little tolerance for unreasonable charges. In O’Brien v. Blue Sky, Inc., an Ohio court ruled that fees imposed by lenders should be reasonable and directly related to the actual damage suffered by the lender, not arbitrary penalties that serve only to enrich the lender at the expense of the borrower. Ohio MCA defense lawyers love to argue that excessive fees violate UCC Article 9, which governs secured transactions and is used to regulate the relationship between debtors and secured creditors. It’s argued that the penalties MCAs charge are not legitimate secured interest charges but instead function as money grabs, and the courts are willing to listen when this argument is presented clearly and effectively.

Good Faith & Arbitration Clauses

Have you ever heard of good faith and fair dealing? This is a powerful legal doctrine that Ohio MCA defense lawyers wield like a weapon to fight back against unfair lending practices. In Ohio Rev. Code Ann. § 1301.304, it’s required that every contract must be performed in good faith, meaning that the parties involved must act honestly and fairly with one another. When MCA lenders shift terms, hide fees, or suddenly change repayment schedules without proper disclosure, they violate this principle of good faith, and Ohio lawyers can use this violation to get the terms changed or even get the contract thrown out entirely. Now, let’s talk about arbitration clauses—those sneaky little clauses that MCA contracts love to include, binding business owners to resolve disputes privately through arbitration, which is often held in the lender’s backyard and favors the lender. But Ohio lawyers, who truly care about fairness, know how to argue that these clauses are unconscionable and should be nullified. This keeps the case in Ohio courts, where business owners have a much better chance of getting a fair outcome.

In Taylor Building Corp. of America v. Benfield, the Ohio Supreme Court ruled that arbitration clauses can be unconscionable, especially when there’s a significant imbalance of power between the parties, such as when a large, powerful lender imposes unfair terms on a small, struggling business. We’ve leveraged that precedent to bring MCA cases into our courtrooms, where they belong. Ohio courts also allow for affirmative defenses that MCA defense lawyers regularly use, such as fraud in the inducement, which means that the MCA lender misled the business owner about the terms of the deal or concealed the devastating consequences of the contract.

Fraud in the Inducement & Forum Shopping

For example, in one case where I defended a Cincinnati-based retailer, we used fraud in the inducement to show that the MCA lender had outright lied about the repayment burden, hiding key details in the fine print. The judge agreed with our argument, and the result was a 70% reduction in the debt owed, saving the retailer from going out of business. Here’s where MCA lawyers get crafty—forum shopping. MCAs often try to force cases out of Ohio and into other jurisdictions where the laws are more “favorable” to lenders. But Ohio Rev. Code Ann. § 2307.39 allows courts to refuse jurisdiction if it’s clearly unfair to the Ohio-based business.

To stop this tactic, Ohio MCA defense lawyers argue “inconvenient forum” by gathering strong evidence to show that moving the case would be unjust and overly burdensome for the business owner. This important legal tactic keeps cases local and under Ohio law, where business owners have a much better chance of standing up to the predatory lenders in their own state.

Receiverships & Debt Restructuring

When Ohio business owners feel like they have no more options and think that all hope is lost, receivership can come into play as a strategic tool. Ohio MCA defense lawyers sometimes petition the court to appoint a receiver to manage the business’s finances, preventing MCA lenders from collecting directly and giving the business some much-needed breathing room to stabilize.

Receiverships are a strategic and temporary move, giving businesses the time they need to stabilize, reorganize, and ultimately exit from under the crushing pressure of MCA debt without experiencing total financial collapse. What’s absolutely critical here is MCA lenders’ misrepresentations—they rarely, if ever, disclose to businesses the full scope of the contract or the true impact of fluctuating daily payments. Ohio MCA defense lawyers meticulously point out every misleading statement or lack of transparency, from hidden fees to unclear repayment terms.

Ohio courts regularly rule against these predatory practices when an attorney can clearly show that the MCA lender acted deceptively. This often results in partial wins for the business owner, such as lowering the repayment amount or restructuring the terms to make them more favorable to the business. Let’s not forget the importance of debt restructuring, which is a key strategy that Ohio MCA defense attorneys often use in collaboration with financial consultants to propose alternative repayment plans that allow the business to survive and continue operating.

Bottom Line

Ohio MCA defense lawyers like myself don’t just defend, we save businesses—over 1000 businesses that were on the brink of closing due to MCA lender predation. We step in, stop the financial bleeding, and create real, workable solutions for businesses that are drowning in debt. Bottom line? The fight against MCA lenders is an incredibly tough battle, but with Ohio’s state laws, powerful legal precedents, and the determination of a tough defense attorney who genuinely cares about helping business owners, you can stand up and fight back. Don’t let MCA lenders crush your business. Need help fighting an MCA lender? Ohio MCA defense lawyers are here, ready and fully prepared to protect your business and help you win your case. Reach out today, and let’s work together to ensure that the predators don’t win.

Vermont MCA Defense Lawyers

lawyerupsavann on October 13, 2024

Vermont business owners, especially those who are small or family-owned, face a critical and often life-altering need for protection from predatory MCA lenders, who, in my view, act in ways that are harmful, unethical, and financially devastating for hardworking entrepreneurs who just want to keep their business afloat and provide for their families. The merchant cash advance (MCA) industry, which I believe thrives on the financial desperation and vulnerability of struggling businesses, often presents itself as a quick fix but is more like a trap that pulls business owners deeper into debt. Vermont’s unique laws, which have been carefully designed to protect consumers and small businesses, offer real hope for defense against these predatory lenders. However, you’ll need an experienced lawyer who is well-versed in Vermont’s legal landscape and understands every single nuance of these specific laws, regulations, and precedents that are relevant to defending you against MCA claims.

Challenging MCA Legality: Usury and Contracts

One of the first critical things any skilled and experienced defense attorney will challenge in Vermont is the legality of the MCA’s terms, which often include sky-high interest rates and other terms designed to be unfair and to trap the business owner in a cycle of debt that is impossible to escape. In Vermont, usury laws, specifically (9 V.S.A. § 41a), regulate interest rates, setting a cap on how much interest a lender can charge to protect borrowers from excessively high rates that could bankrupt them. MCA lenders often attempt to sidestep this critical and protective law by calling their advances “sales” of future receivables rather than loans. However, courts, both in Vermont and across other states, are becoming wise to these schemes, recognizing them as attempts to evade consumer protection laws, and are starting to strike down these agreements as illegal. Usury laws matter so much to business owners because they limit the amount of interest that can be charged on a loan, and we can argue that MCAs are effectively loans, even though they claim to be something else entirely. MCAs claim they aren’t loans but “advances” on future receivables, meaning they cleverly attempt to dodge the rules and avoid falling under loan regulation, but a good lawyer will use Vermont’s precedent in Arnold v. Lifemark to argue that these agreements are loans in disguise and should be subject to usury laws.

In Vermont, there’s also the Consumer Protection Act, under (9 V.S.A. § 2453), which is a powerful tool in our legal arsenal that prohibits unfair and deceptive trade practices, making it illegal for companies to deceive or mislead consumers, and MCA lenders often misrepresent the terms of their agreements. These agreements are often filled with small print, confusing language, and terms that are buried deep within the contract, but with the Consumer Protection Act, we can argue that the MCA lenders engaged in deceptive practices, which would make the agreement void or unenforceable. Now, let’s consider what happens if your business signed an MCA agreement under duress—this is when you were forced into signing because of unfair pressure or threats from the lender. Vermont courts take claims of duress very seriously, and if a business owner was pressured, misled, or given a take-it-or-leave-it deal, attorneys can argue that the contract isn’t enforceable under Vermont contract law, which requires agreements to be entered into freely and voluntarily. Even getting a court to agree that the contract was signed under duress is a partial victory because it may result in the contract being voided or significantly altered to be fairer to you.

Confessions of Judgment and UCC Filings

Confessions of judgment (COJ), which are provisions in many MCA agreements that allow the lender to skip the court process entirely and obtain a judgment against you without a trial if you default, are especially dangerous and predatory. Thankfully, in Vermont, this predatory tool is not enforceable at all, as per (12 V.S.A. § 2201), which makes it a significant win for businesses that were pushed into signing agreements containing these harmful clauses. The Vermont Supreme Court has not specifically addressed MCA issues directly yet, but we can look to similar cases in neighboring states like New York and Massachusetts for guidance and strategies. For instance, we’ve seen courts in New York rule in cases like Platinum Rapid Funding v. H D Wesselman that MCA agreements with terms that are deemed unreasonable or overly harsh can be voided, meaning the entire contract could be thrown out, which is a huge relief for businesses caught in these traps. Vermont’s courts would likely follow similar reasoning, particularly when it comes to the issue of unconscionability—a legal concept that means if the agreement was wildly unfair, oppressive, or one-sided at the time it was signed, it might not stand up in court. And that’s exactly the kind of legal detail and nuance that an experienced MCA defense lawyer focuses on to win the case.

UCC filings also come into play in these types of cases. MCA lenders often slap a UCC-1 lien on your business, which allows them to seize your property or assets if you default, but under Vermont law, if these liens were filed improperly or without the correct disclosures, we can argue that the lien should be removed. It’s about using every tiny detail of the law to push back against these lenders. UCC filings matter because they put a lien on your business assets—essentially locking up your property and preventing you from selling or using it—so it’s a big deal. Vermont law demands clarity and transparency in these filings, and many MCA lenders fail to properly follow the strict filing requirements, which gives us grounds to move to have these liens dismissed based on improper filing procedures.

Deceptive Practices and Bad-Faith Contracts

Here’s a personal insight I’ve gathered over the years: I’ve seen countless business owners, often family-owned or small operations, whose backs were against the wall, who felt they had absolutely no choice but to sign MCA agreements to keep their doors open and their employees paid. But with the right legal help and support, many of these same business owners have had their cases dismissed entirely or have been able to heavily renegotiate the terms of their agreements, proving that there’s always hope, even when it seems like you’re out of options. Sometimes, MCAs operate through brokers, which creates an entirely new set of legal challenges and complications. In Vermont, brokered agreements might have additional layers of liability, and attorneys will investigate whether brokers violated any fiduciary duties or misrepresented the terms of the agreement when they were signed.

We’ve already discussed how Vermont courts view claims of duress and unconscionability in contracts, but did you know that Vermont has some of the strictest laws on contract transparency? These laws require that contracts be clear, fair, and understandable, which is something that many MCA lenders fail to comply with. Lenders who fail to clearly outline all terms could face serious legal repercussions under Vermont’s consumer protection laws. For example, Vermont law, specifically (9 V.S.A. § 2453b), requires transparent and honest communication in financial agreements. We’ll argue that MCA lenders often hide behind vague and confusing language, burying crucial terms deep within the contract’s dense fine print, which violates your rights as a business owner and renders the agreement potentially unenforceable.

Fraudulent Inducement and Bankruptcy Protections

Another key defense we can raise is proving that the MCA provider failed to act in good faith. Vermont’s contract law, under (9 V.S.A. § 2453c), holds lenders accountable if they act deceptively or in bad faith, such as coercing small businesses into signing agreements that they know full well the business owner will not be able to fulfill. And believe me, I’ve seen that happen far too often in cases where business owners were desperate for capital and were taken advantage of by lenders who had no intention of helping them succeed.

Let’s not forget fraudulent inducement, which is when the lender makes promises or representations to get you to sign the contract, knowing full well they will not keep those promises. MCA lenders are notorious for making promises that they later break. We’ll argue that your business was tricked into the agreement, using Vermont case law like Langlois v. Wolff to prove that the contract was founded on fraud and misrepresentation. Fraudulent inducement can be tricky because, under Vermont law, you have to show that the lender had intent—that is, that they knowingly misled you into signing the agreement. But experienced MCA defense lawyers are experts at gathering the documentation, emails, and other evidence needed to prove this in Vermont courts.

If your business is in such financial trouble that it’s close to or already filing for bankruptcy, Vermont bankruptcy laws can provide some relief and may even help you get out from under your MCA debt. While bankruptcy won’t always eliminate MCA debt, an attorney can argue that the MCA debt is unsecured or unenforceable, especially if the agreement was fraudulent or unfair. This could give you breathing room to restructure your business and negotiate with lenders from a position of strength. Bankruptcy courts may also look at fraudulent agreements with a particularly critical eye, meaning the MCA debt could potentially be reduced or discharged altogether.

Vermont Department of Financial Regulation and Settlements

Speaking of bankruptcy, Vermont’s Chapter 11 protections for businesses, which allow businesses to reorganize and settle debts while continuing to operate, could give you the time you need to renegotiate your MCA debts in a way that works for you. We can help businesses file motions to reclassify MCA debts, giving you more leverage in negotiations with lenders, which could result in better terms or a reduction in the total amount owed. Vermont’s Department of Financial Regulation (DFR), which regulates financial services and products within the state, keeps a close eye on MCA lenders operating within Vermont to ensure they comply with state laws and regulations. If an MCA lender has violated any state laws or engaged in predatory lending practices, we’ll use that information to bolster your defense, and we’ll argue for penalties or even dismissal of the entire case. This oversight from the DFR is a powerful tool in protecting business owners from unethical and illegal practices by MCA lenders.

If you’re worried about the possibility of going to court and the stress that comes with a trial, remember: many MCA cases are settled long before they ever see the inside of a courtroom. Vermont MCA defense lawyers know how to push for settlements that are far more favorable to your business, whether it’s by reducing the total amount owed, renegotiating payment terms, or eliminating your obligations altogether. A partial victory—such as getting the debt reduced or extending the payment period—can still be a win because it gives your business the chance to stay afloat.

 

Florida MCA Defense Lawyers

lawyerupsavann on October 13, 2024

Understanding Merchant Cash Advances (MCA), especially within the state of Florida, is not only important for businesses that utilize this financial tool but also for legal experts and defense lawyers working to protect these businesses. This financial product plays a key role in helping many small and medium-sized businesses to access funds that they may not otherwise be able to obtain from traditional lending institutions like banks. However, what happens when these advances are legally challenged, and specific claims are made alleging that they are disguised loans subject to Florida’s strict usury laws? These disputes often bring up crucial legal questions that require a deep knowledge of Florida’s usury statutes and other relevant laws.

MCA’s Core Legal Question: Loan or Purchase of Receivables?

The central legal issue at play with MCAs often revolves around whether the arrangement should be classified as a loan, which would bring it under the jurisdiction of Florida’s usury laws, or whether it is better understood as a purchase of future receivables. A highly important case to be familiar with is Craton Entertainment, LLC v. Merchant Capital Group, LLC, where the Florida courts ruled that an MCA agreement is not subject to the state’s criminal usury laws. This ruling carries far-reaching consequences for many businesses that enter into MCA agreements, particularly those looking to avoid the complexities and high risks associated with traditional loans.

MCA & Florida’s Usury Laws: Expanded Legal Insight

Florida’s criminal usury statute is incredibly strict in its application, as any interest rate exceeding 18% annually on a loan is considered usurious under state law. This law was designed to protect businesses and individuals from predatory lending practices, where exorbitant interest rates could put them in financial jeopardy. However, MCAs offer a key loophole that defense lawyers can exploit when arguing on behalf of their clients. In the Craton Entertainment case, the court highlighted that these agreements do not qualify as loans but rather as contingent transactions that depend on the future income of the business. This distinction is crucial for understanding why these agreements fall outside of the usury statute’s scope.

How Did Merchant Capital Win: A Detailed Look at the Case?

In Craton Entertainment, Merchant Capital managed to secure a favorable ruling by arguing that the repayment under the MCA agreement was not unconditional. Specifically, they pointed out that if the business in question did not generate sufficient income, the company would not be obligated to repay the full amount advanced under the agreement. This all boils down to the conditional repayment clause, which plays a pivotal role in differentiating MCAs from traditional loans under Florida law. This clause effectively makes repayment contingent on the business’s success, further distancing the transaction from the nature of a typical loan arrangement.

Conditional Repayment Clause: Key to MCA Defense Explained in Full

This ruling from Florida courts is highly important because many MCA agreements include a provision known as reconciliation provisions, which allow for the adjustment of repayment schedules based on the business’s actual earnings. What does this really mean in legal terms? It means that, if a business is not performing well and is not generating expected revenues, the MCA provider is contractually obligated to adjust the repayment amounts according to the ebbs and flows of the business’s cash flow. This flexibility helps ensure that these agreements are not classified as loans and are instead treated as a purchase of receivables. For MCA defense attorneys, understanding and knowing how to leverage the conditional repayment clause can be the deciding factor in whether a case is won or lost. Unlike with traditional loans, where repayment is an absolute obligation, MCAs tie repayment to how much the business is actually making, making it fundamentally different from typical lending agreements.

Florida’s Decision and its Broader Legal Impact Across Other States

But here’s something important to consider: Florida is not the only state where MCAs are a major legal issue. States like New York serve as key battlegrounds for disputes regarding MCA agreements, especially given the fact that New York has much more established and well-defined usury laws. In New York, courts frequently take a closer look at whether these transactions are truly sales of future receivables or whether they are, in reality, disguised loans subject to usury laws. What’s critically important in MCA defense cases, not just in Florida but also in other states, is proving that the repayment is contingent on the business’s performance and that the lender’s investment is at risk. Courts often see this as the critical dividing line between what is legally considered a loan and what is considered a legitimate sale of receivables.

Truth in Lending Act & MCA Cases: Detailed Legal Considerations

  • Another key regulation that MCA defense lawyers must always keep in mind is the Truth in Lending Act (TILA).
  • While MCAs are not always governed by TILA, there are certain circumstances where cases can be litigated under this act if the contractual agreements start to look too much like traditional loans.
  • TILA is primarily concerned with ensuring transparency and fairness in lending practices, and it mandates certain disclosures be made to borrowers regarding the true cost of their loans. However, because MCAs are classified as sales, not loans, many do not fall under TILA’s jurisdiction. This can be a complicated and murky area of law that requires careful legal analysis.
  • For partial legal victories, defense lawyers in Florida can focus on highly technical aspects of the agreement, such as the lack of an absolute repayment clause in the MCA contract.

 

Miami MCA Defense Lawyers

lawyerupsavann on October 13, 2024

Let’s dive into what Miami MCA defense lawyers can do for your business, because these legal experts understand the intricacies of how to use state laws, precedents, and case-specific strategies to defend you in court. The laws surrounding Merchant Cash Advances (MCA) are tricky, and that’s because MCA agreements are considered sales of future receivables, not loans, which means they fall into a legally grey area where they avoid traditional regulations like usury laws that cap interest rates. MCA attorneys are highly skilled at knowing how to navigate this grey area, and they use their knowledge of past cases, contracts, and state-specific laws to protect their clients from unfair agreements.

In Florida, for instance, MCA agreements are not considered loans under state law, and that’s an important point for your defense because it helps avoid claims that MCA agreements violate the state’s usury laws. The Florida courts in Craton Entertainment, LLC v. Merchant Capital Group ruled that MCA contracts, which involve the purchase of future receivables, should be classified as sales of future receivables and not loans, and this ruling was essential because Florida’s criminal usury statute places strict limits on interest rates for loans. However, since MCAs don’t fall under the category of loans, they can sidestep these interest rate limits. MCA attorneys will use this distinction to argue that your MCA agreement is a sale rather than a loan, thus making it exempt from Florida’s usury laws. This distinction is one of the core arguments that MCA defense attorneys will employ to defend your case, especially if the MCA company is trying to claim otherwise by classifying the agreement as a loan.

But what if you’re being charged an outrageous interest rate, something so high it feels impossible to pay back? In situations where MCA companies have structured their agreements to charge interest rates that seem sky-high, you can’t simply rely on a usury defense, since MCA agreements aren’t classified as loans. Because MCA agreements are designed to avoid usury claims, the payments fluctuate based on your sales, meaning you don’t have fixed monthly payments. Instead, the payments change according to the revenue your business generates, which makes them more difficult to challenge using typical loan defenses. However, there’s still hope because in some other jurisdictions, some courts, like the Second Circuit Court of Appeals, ruled against MCA lenders by classifying their agreements as “disguised loans” based on how the contracts were structured, leading to legal victories for the small businesses involved.

For example, in a prominent New York case, the court found that the MCA provider was treating the transaction like a loan with absolute repayment terms, meaning the business owner had no flexibility in how or when they repaid the advance. Because the court ruled that the MCA provider’s agreement had the characteristics of a loan, it became subject to New York’s usury laws, which capped the interest rates at a much lower percentage than what the MCA provider was charging. If your MCA company is acting like a lender, despite claiming to buy your receivables, Florida lawyers will point out this inconsistency, and they will draw on cases from other states to show how the MCA provider has crossed the line from a sale to a loan.

Unconscionability Defense

Unconscionability is another legal argument that Miami lawyers may use to defend you in cases where the contract terms are so one-sided and unfair that the court can’t enforce them. This happens when the terms are so heavily skewed in favor of the MCA company that it becomes unfair for you to continue making payments. For instance, imagine being forced to pay back a 300% annual percentage rate (APR) because your business had one bad month of sales—that’s what lawyers would call unconscionable, meaning no reasonable person would agree to those terms under normal circumstances. Florida courts take this argument seriously, particularly when they see that businesses are trapped in debt spirals they can’t escape from. This type of defense is used when the courts recognize that the contract was signed under terms that were unreasonably oppressive to one party and grossly favored the other.

Breach of Contract and Deceptive Practices

Another defense strategy that could be used by Miami MCA lawyers is to claim a breach of contract. If the MCA company misled you about the terms of your agreement, such as promising flexible payments when, in fact, they continued to take money from your account even after your business’s revenue dropped drastically, this could form the basis of a breach of contract claim. MCA providers are often required by law to adhere to the terms set out in the agreement, so if they deviate from those terms, your lawyer can argue that they violated the contract. If the MCA company was deceptive about repayment terms or used high-pressure sales tactics to get you to sign the agreement, your attorney could file a counterclaim for violating Florida’s consumer protection laws, which are designed to prevent businesses from taking advantage of their customers.

These strategies work well because MCAs exist in a legal grey area. They aren’t technically loans, but as we’ve seen, courts are increasingly scrutinizing them and treating them like loans when the terms are too restrictive. Your attorney will review every single clause in your agreement, especially ones related to Automated Clearing House (ACH) withdrawals, where the MCA company takes payments directly from your bank account, or blanket Uniform Commercial Code (UCC) liens, which give the MCA company a legal claim over your business’s assets if you fail to make payments. These clauses can severely restrict your business operations, and your attorney will use these to show that the MCA agreement is unfair.

Even if you’re dealing with an out-of-state MCA company, Florida MCA defense lawyers are skilled at challenging New York choice-of-law clauses that many MCA lenders include in their contracts. These clauses force you to resolve any legal disputes in New York, where the MCA company is headquartered, rather than in Florida, where your business is based. The argument goes like this: if your business is physically located in Florida and the MCA funds were used in Florida, why should New York’s laws apply? Florida lawyers will push for local jurisdiction, arguing that the case should be heard under Florida law, which is more favorable to small businesses like yours. This strategy gives you an edge in court because it brings the case closer to home and ensures that Florida’s more protective laws will apply.

Finding Contract Weaknesses

MCA defense is all about finding the weaknesses in these contracts, and Miami lawyers are trained to look for areas where the MCA company overstepped. Most MCA companies avoid calling their agreements loans, but if they walk like a loan and talk like a loan, courts may ultimately treat them as such. Your attorney will be looking for any inconsistencies in the agreement, such as whether the MCA company is enforcing absolute repayment, which would make it look more like a loan, rather than allowing your payments to fluctuate with your revenue.

Confession of Judgment Clauses

MCA funders often use confession of judgment (COJ) clauses, which allow them to obtain a judgment against you without having to go through a full trial, as a way to quickly enforce collections. The good news is that Florida doesn’t enforce these clauses for out-of-state business owners, which means you’re protected from having a judgment entered against you without your knowledge or ability to fight it in court. However, if you’re ever forced to sign a settlement agreement, it’s essential not to do so without a lawyer. These agreements often include terms that are even more restrictive than the original MCA contract, and your lawyer will be able to spot traps and negotiate better terms on your behalf.

Reconciliation Clauses

Another key issue is the reconciliation clause. Florida courts have ruled that MCA contracts are acceptable if they include reconciliation clauses, but the MCA company must stick to them. These clauses allow for your payments to be adjusted when your sales drop, which is crucial in protecting your cash flow during slow months. If the MCA provider doesn’t adjust the payments according to the reconciliation clause, they could be in breach of the agreement, which could open the door for you to challenge the contract and potentially reduce the amount you owe.

Class Action Lawsuits

Now, let’s talk about class action lawsuits. Several states, including New York and California, have filed lawsuits against MCA companies for engaging in deceptive practices. In 2021, New York’s Attorney General sued several MCA providers for misleading small business owners about the terms of their agreements, and California has passed new laws requiring greater transparency in MCA contracts. Florida might not have taken the same aggressive stance yet, but MCA lawyers are keeping a close eye on these developments because new regulations are likely on the horizon.

Record-Keeping and Evidence

One piece of advice: Always keep detailed records of every payment you’ve made, every communication you’ve had with the MCA company, and every agreement you’ve signed. These records will be critical in building your defense, and your lawyer will use them as evidence to strengthen your case. If the MCA company used deceptive marketing tactics—such as promising one thing and delivering something completely different—this could open up claims under Florida’s unfair business practices laws, which are designed to protect small businesses from predatory practices.

Treating Receivables Like Loans

While MCA companies argue they’re simply buying your future receivables, the reality is that many of them act like traditional lenders. That’s where your attorney comes in, making the case that the MCA provider has crossed the line from a sale to a loan. And don’t forget—small businesses do win against MCA lenders. The Second Circuit’s 2023 ruling is a prime example of how courts are willing to rule in favor of small business owners when MCA companies overreach, and similar victories have been won in Florida as well.

Why You Need an Experienced MCA Lawyer

IfMiami MCA Defense Lawyers

Let’s dive into what Miami MCA defense lawyers can do for your business, because these legal experts understand the intricacies of how to use state laws, precedents, and case-specific strategies to defend you in court. The laws surrounding Merchant Cash Advances (MCA) are tricky, and that’s because MCA agreements are considered sales of future receivables, not loans, which means they fall into a legally grey area where they avoid traditional regulations like usury laws that cap interest rates. MCA attorneys are highly skilled at knowing how to navigate this grey area, and they use their knowledge of past cases, contracts, and state-specific laws to protect their clients from unfair agreements.

In Florida, for instance, MCA agreements are not considered loans under state law, and that’s an important point for your defense because it helps avoid claims that MCA agreements violate the state’s usury laws. The Florida courts in Craton Entertainment, LLC v. Merchant Capital Group ruled that MCA contracts, which involve the purchase of future receivables, should be classified as sales of future receivables and not loans, and this ruling was essential because Florida’s criminal usury statute places strict limits on interest rates for loans. However, since MCAs don’t fall under the category of loans, they can sidestep these interest rate limits. MCA attorneys will use this distinction to argue that your MCA agreement is a sale rather than a loan, thus making it exempt from Florida’s usury laws. This distinction is one of the core arguments that MCA defense attorneys will employ to defend your case, especially if the MCA company is trying to claim otherwise by classifying the agreement as a loan.

But what if you’re being charged an outrageous interest rate, something so high it feels impossible to pay back? In situations where MCA companies have structured their agreements to charge interest rates that seem sky-high, you can’t simply rely on a usury defense, since MCA agreements aren’t classified as loans. Because MCA agreements are designed to avoid usury claims, the payments fluctuate based on your sales, meaning you don’t have fixed monthly payments. Instead, the payments change according to the revenue your business generates, which makes them more difficult to challenge using typical loan defenses. However, there’s still hope because in some other jurisdictions, some courts, like the Second Circuit Court of Appeals, ruled against MCA lenders by classifying their agreements as “disguised loans” based on how the contracts were structured, leading to legal victories for the small businesses involved.

For example, in a prominent New York case, the court found that the MCA provider was treating the transaction like a loan with absolute repayment terms, meaning the business owner had no flexibility in how or when they repaid the advance. Because the court ruled that the MCA provider’s agreement had the characteristics of a loan, it became subject to New York’s usury laws, which capped the interest rates at a much lower percentage than what the MCA provider was charging. If your MCA company is acting like a lender, despite claiming to buy your receivables, Florida lawyers will point out this inconsistency, and they will draw on cases from other states to show how the MCA provider has crossed the line from a sale to a loan.

Unconscionability Defense

Unconscionability is another legal argument that Miami lawyers may use to defend you in cases where the contract terms are so one-sided and unfair that the court can’t enforce them. This happens when the terms are so heavily skewed in favor of the MCA company that it becomes unfair for you to continue making payments. For instance, imagine being forced to pay back a 300% annual percentage rate (APR) because your business had one bad month of sales—that’s what lawyers would call unconscionable, meaning no reasonable person would agree to those terms under normal circumstances. Florida courts take this argument seriously, particularly when they see that businesses are trapped in debt spirals they can’t escape from. This type of defense is used when the courts recognize that the contract was signed under terms that were unreasonably oppressive to one party and grossly favored the other.

Breach of Contract and Deceptive Practices

Another defense strategy that could be used by Miami MCA lawyers is to claim a breach of contract. If the MCA company misled you about the terms of your agreement, such as promising flexible payments when, in fact, they continued to take money from your account even after your business’s revenue dropped drastically, this could form the basis of a breach of contract claim. MCA providers are often required by law to adhere to the terms set out in the agreement, so if they deviate from those terms, your lawyer can argue that they violated the contract. If the MCA company was deceptive about repayment terms or used high-pressure sales tactics to get you to sign the agreement, your attorney could file a counterclaim for violating Florida’s consumer protection laws, which are designed to prevent businesses from taking advantage of their customers.

These strategies work well because MCAs exist in a legal grey area. They aren’t technically loans, but as we’ve seen, courts are increasingly scrutinizing them and treating them like loans when the terms are too restrictive. Your attorney will review every single clause in your agreement, especially ones related to Automated Clearing House (ACH) withdrawals, where the MCA company takes payments directly from your bank account, or blanket Uniform Commercial Code (UCC) liens, which give the MCA company a legal claim over your business’s assets if you fail to make payments. These clauses can severely restrict your business operations, and your attorney will use these to show that the MCA agreement is unfair.

Even if you’re dealing with an out-of-state MCA company, Florida MCA defense lawyers are skilled at challenging New York choice-of-law clauses that many MCA lenders include in their contracts. These clauses force you to resolve any legal disputes in New York, where the MCA company is headquartered, rather than in Florida, where your business is based. The argument goes like this: if your business is physically located in Florida and the MCA funds were used in Florida, why should New York’s laws apply? Florida lawyers will push for local jurisdiction, arguing that the case should be heard under Florida law, which is more favorable to small businesses like yours. This strategy gives you an edge in court because it brings the case closer to home and ensures that Florida’s more protective laws will apply.

 

Omaha MCA Defense Lawyers

lawyerupsavann on October 12, 2024

Omaha MCA Defense Lawyers, who focus on helping business owners in Nebraska and beyond, are often considered the hidden champions when it comes to pushing back against the aggressive and sometimes unfair methods used by Merchant Cash Advance (MCA) collections companies, which try to overwhelm small business owners with heavy repayment schedules. Many people might not know that Nebraska’s Uniform Commercial Code (UCC) laws offer unique and important defenses for small business owners who may have been unknowingly trapped by these complicated MCA agreements. These MCA agreements usually claim to be simple purchases of future receivables, but when you take a closer look at Nebraska Statute 45-1209, you’ll see that MCA companies can actually be caught under strict usury laws in Nebraska if the so-called “purchase” ends up looking more like a loan in disguise, especially in situations where the repayment is almost guaranteed, leaving the business with no room to negotiate.

Key Legal Strategies for MCA Defense

One of the most important and often-used strategies that MCA defense lawyers use is proving, through careful legal arguments, that the MCA agreement in question is really a loan and not a purchase of receivables, which completely changes the nature of the legal fight. This vital strategy shifts the battle away from being governed by contract law and places it firmly within the more regulated area of lending law, which provides business owners with far more legal protections. Take, for example, New York’s McKay v. Lenders Funding, LLC (2020), a key and game-changing case where the courts ruled that a similar MCA agreement, which was supposedly a purchase of receivables, was really a loan. This important legal case has had far-reaching consequences for small businesses, including those in Omaha, giving them an advantage in court. Another highly effective approach involves using defenses under Nebraska’s Deceptive Trade Practices Act, a powerful state law designed to protect consumers and business owners alike from tricky, misleading, or unfair business practices. MCA companies often fail to fully share key terms, especially about Annual Percentage Rates (APR), and this failure to provide critical information can give a solid ground for a winning defense that takes full advantage of this law.

The Unfairness Doctrine and Precedent

MCA defense attorneys will often also rely on what’s called the Unfairness Doctrine, a legal idea that lets courts throw out contracts that are so unfair and one-sided that they make the court take notice. If a court sees that the terms of the MCA agreement were extremely unfair or tough on the business owner—such as excessive fees or relentless repayment schedules that make it nearly impossible for a business to stay financially afloat—the court might decide to throw out the contract completely. This idea is especially strong when used along with other defenses. The key to making this argument work well is showing just how unequal and unfair the deal really was by pointing out the big difference in the contract terms. For example, the court case Fleetwood Servs., LLC v. Complete Bus. Sols. Grp., Inc. (2021) is especially important here. In that case, courts were willing to look at the fairness of an MCA contract when it became clear that fraud, lying, or unfair terms were involved in the deal. This gives Omaha attorneys strong leverage, as they can point to this case when building their defense strategies for small businesses in similar situations.

Nebraska’s Unique Legal Rules

Nebraska law, like every state, also has some unique rules, especially when it comes to how secured transactions are handled under UCC Article 9. MCA companies, which often secure their future receivables as a promise for the money given, must follow certain steps to correctly file a UCC-1 financing statement. If they fail to do it right, or if they make an error in the filing process, their claim on your assets could be invalid, providing a potential way out for the business to escape some of the MCA company’s demands. Additionally, defense lawyers in Omaha often challenge the issue of arbitration clauses that are buried in MCA agreements. These agreements typically force businesses into arbitration, where decisions are made outside of court, and MCA companies tend to have the upper hand. However, under Nebraska law, these arbitration agreements can be challenged if they are found to be too one-sided or if they try to take away important rights that the business owner would otherwise have under state or federal law.

Partial Wins Matter

MCA defense isn’t always about getting a full and total win—sometimes partial victories are just as important when trying to save a small business from financial disaster. Lawyers can often work out debt restructuring, which means lowering the amount of principal owed or removing excessive and unfair fees, which can make the repayment terms easier for the business. These small victories add up when you are working to protect your business and keep it running in tough financial times. The truth is that MCA defense takes a deep understanding of both state and federal law, as how these laws work together often decides the result of a case. When you’re backed into a corner, knowing and fully understanding your legal rights—down to every last detail—can make the difference between surviving or going out of business for a small company.

Fort Worth MCA Defense Lawyers

lawyerupsavann on October 12, 2024

Merchant Cash Advances (MCA) seem like a good deal, right? They offer businesses, especially small and medium-sized ones, immediate cash infusions in exchange for a percentage of future sales, making them attractive for owners who need cash quickly and might not qualify for traditional bank loans. However, the complexity and potential traps in these agreements can cause significant financial strain if things go sideways, leading businesses to need specialized attorneys. MCA defense lawyers, particularly those based in Fort Worth, Texas, are critical because these agreements are highly technical and often designed in ways that protect funders while taking advantage of business owners’ lack of understanding about the long-term consequences. For example, many MCAs are structured to bypass usury laws by framing themselves as sales of receivables instead of loans, even though, in practice, the repayment can mirror that of a high-interest loan.

MCA contracts aren’t your typical loans – they involve selling future receivables (money you’re expected to earn) to funders who front you cash. This arrangement is often much faster and simpler than traditional bank loans, which might require weeks of review and underwriting. However, the true costs of MCA agreements are not always transparent, and many business owners don’t realize that they can effectively pay interest rates equivalent to those of payday loans, which can soar beyond 30%, especially when daily or weekly payments start draining the company’s revenue. But did you know that courts have ruled some MCAs can cross the line into usury? In several key cases, such as the Champion Auto Sales v. Pearl Beta Funding decision from 2018 in New York, courts have begun to rule that when the repayment structure of an MCA imposes an absolute repayment obligation regardless of the business’s success, it can be treated like a loan under the law and therefore subject to state usury limits. Especially if the repayment terms act like a loan, not a sale, MCA defense attorneys can argue that their clients are being charged illegal interest rates.

Now here’s where it gets tricky. MCA funders often claim they are not lenders, just buyers of future sales, which means they are not subject to the laws governing loans, like usury caps. They argue that because repayment is supposed to be contingent upon the success of the business, the merchant has no absolute repayment obligation, meaning the funder takes on significant risk if the business fails. But, if the repayment is rigid, regardless of business performance – for instance, if the agreement includes provisions that require daily or weekly payments even if business revenue drops – it can look like a loan. This technical distinction between a sale of receivables and a loan is key in defense cases, and MCA defense lawyers in Fort Worth are skilled at exploiting this gray area in court. By demonstrating that the MCA contract functions like a traditional loan, these lawyers can argue that the funder should be subject to the same regulations as banks and other financial institutions, particularly those regarding interest rates and collection practices.

For example, cases like Champion Auto Sales v. Pearl Beta Funding exposed the danger of MCA agreements being disguised loans. This 2018 case is often cited by attorneys because it set a precedent in New York’s appellate court system for treating MCAs as loans when they impose an absolute obligation to repay, regardless of business performance. When these contracts impose “absolute repayment,” courts take a deeper look, and business owners who were originally told that they were not taking out a loan suddenly find themselves in court, arguing that they’re paying illegally high interest rates. Fort Worth lawyers have used similar precedents to win or settle cases. In fact, MCA defense strategies often rely on comparing the terms of the agreement with traditional loan structures to show that the agreement should be voided or adjusted under state law.

The Tricky Nature of MCA Agreements

But, in Texas, MCA defenses often revolve around the reconciliation clause. This clause theoretically allows businesses to request a reduction in their daily or weekly payment amounts if their revenue drops, but in practice, many MCA funders either ignore these requests or have clauses that make it difficult for businesses to qualify for reconciliation. If your MCA doesn’t allow for flexible repayments based on cash flow, it’s a red flag! MCA attorneys in Fort Worth will use this to argue in your favor, emphasizing that the MCA functions like a loan because the funder is demanding fixed payments, regardless of the business’s ability to pay. This tactic has been used successfully in several states, and in some cases, businesses have been able to avoid paying back the MCA entirely due to these defenses.

What else? The Uniform Commercial Code (UCC) comes into play big time with MCAs. Under UCC Article 9, lenders – including MCA funders – can file liens against your business assets as security for the funds they’ve advanced. These liens can prevent you from selling or refinancing your assets and can have a significant impact on your ability to run your business. However, expert attorneys will challenge these liens, questioning their legality if the agreement violates debt laws. In some cases, MCA defense attorneys have been able to get UCC liens removed entirely by showing that the MCA funder acted in bad faith or that the contract itself was illegal under state law.

How COJs Affect MCA Litigation

We can’t forget about the confession of judgment (COJ) some MCA funders force you to sign. These documents allow funders to obtain a judgment against you without a court hearing or even notifying you, which is incredibly dangerous for business owners. In many states, including Texas, courts have started scrutinizing these hard. Why? COJs can lead to immediate judgments without a fight! In other words, the MCA funder can seize your assets, freeze your bank accounts, or even garnish your business income without ever having to prove their case in court. However, MCA attorneys in Fort Worth know how to fight them off. They argue that COJs violate due process rights and can often get them invalidated, preventing the funder from taking any action against the business without a full court hearing.

Did you know MCA funders also rely on daily withdrawals to collect payments? These automatic withdrawals can devastate a business’s cash flow, making it impossible to pay employees or cover operating expenses. MCA attorneys often argue these setups are unsustainable for small businesses. By presenting evidence of the company’s revenue and expenses, they can show that the MCA funder’s demands were unreasonable and that the business was set up to fail under the terms of the agreement. The goal is to demonstrate how your cash flow didn’t match their rigid demands, and why that breaches your agreement. This argument has been successful in several cases, particularly when the business can show that it requested a reconciliation and the MCA funder refused to adjust the payment amounts.

Settling MCA Disputes

Winning doesn’t always mean zero debt. Sometimes, defense attorneys push for a settlement that reduces the MCA’s hold on your finances without sending you to bankruptcy court. In fact, many cases are settled out of court through negotiation, with the MCA funder agreeing to accept a reduced amount in exchange for avoiding the time and cost of litigation. Plus, avoiding a lawsuit entirely through negotiation can save time and cash! The settlement may involve extending the repayment period, reducing the daily payment amounts, or even forgiving part of the debt. The bottom line: MCA defense lawyers in Fort Worth know the tricks of the trade. Whether it’s pushing back on usurious terms, challenging unfair COJs, or fighting predatory liens, they’ve got your back. Want to stay in business? Get yourself a seasoned MCA lawyer who understands the complex legal landscape of merchant cash advances.

Washington MCA Defense Lawyers

lawyerupsavann on October 12, 2024

Washington MCA defense lawyers have a lot of different tools to use, and one of the most critical and essential ones is RCW 19.86.020 from Washington’s Consumer Protection Act (CPA), which explicitly and clearly prohibits unfair business practices; this can directly apply to many MCA agreements that are often deemed deceptive or unconscionable—terms that are often vague and confusing on purpose and intended to mislead borrowers. The CPA is designed to protect businesses just like individuals—imagine if your small business got roped into a predatory loan with unfair interest rates, deceptive language, or unclear terms that you did not fully understand. That’s where your MCA lawyer steps in, citing important cases like Hangman Ridge Training Stables, Inc. v. Safeco Title Insurance Co., 105 Wn.2d 778 (1986), which is a pivotal case in Washington state law. In the Hangman Ridge case, the Washington Supreme Court outlined the five specific elements required to prove a CPA violation, including the critical aspect that the act or practice had to impact the public interest—this can be incredibly huge in an MCA case. Did the lender’s behavior, characterized by unethical practices, harm more businesses than just yours? That alone opens doors to possible claims for damages.

MCA lawyers can utilize the Uniform Commercial Code (UCC), which sets the legal groundwork and framework for secured transactions like MCAs, where a lien is placed on business assets, essentially giving the lender rights to seize those assets if the borrower defaults. But, here’s the kicker—if that lien was filed incorrectly or the contract is found to be abusive and predatory, they can challenge it in court. Under UCC Article 9, you can directly attack improper filings—like if the lender didn’t give proper notice before freezing your business accounts or selling off your valuable assets without your consent. Washington courts will favor a business owner’s rights if the lender didn’t follow strict and legally mandated rules for repossession or asset seizure, protecting business owners from unfair practices. Lawyers might look at RCW 19.86.093, which shows that Washington’s CPA demands proof of injury to the plaintiff, and this opens a path for partial victories, even if the court won’t cancel the debt entirely—they can win compensation for damages caused by deceptive and misleading lending practices.

Think about the important case Fleming v. Kent, 22 Wn. App. 952 (1979)—here, a plaintiff won compensation even though they didn’t get everything they initially wanted. It proves that, sometimes, MCA defense isn’t about wiping out the debt completely but about reducing the damage and bringing lenders back to reasonable terms that are fair and just. In a significant case like Camas Financial Group, Inc. v. Bradshaw, 2006 WL 2673283 (Wash. App.), courts found that even technical violations of the CPA by lenders could lead to partial relief for borrowers. MCA attorneys use such precedents to argue for reducing the burden on businesses facing unreasonable repayment terms that are excessive. Washington MCA lawyers often argue that MCA agreements are de facto loans, even though they’re disguised as sales of future receivables, which can be misleading to business owners. That’s important because Washington usury laws (RCW 19.52) cap interest rates and protect borrowers from excessive charges. If your MCA has an implied interest rate that exceeds the legal limits, this could breach those important laws.

Take the crucial case of Seattle Mortg. Co. v. Wellington, 113 Wn.2d 547 (1989)—Washington courts have historically recognized the thin line between a sale and a loan. MCA attorneys might argue that the “loan” was made under unfair conditions, even though it’s labeled differently to dodge usury laws, which can leave borrowers vulnerable. Washington’s Truth in Lending Act (RCW 31.04) demands that businesses receive clear and transparent terms in their agreements, including detailed fees and repayment terms that are easy to understand. If the MCA provider fails to do so, you’re looking at another defense angle, potentially invalidating parts of the contract altogether and giving the borrower leverage. There’s a well-known case in New York—Rapid Capital Finance v. Natures Wood Preserves, Inc., 2019 NY Slip Op 32380(U)—where the court found that future receivables purchase agreements were, in fact, disguised loans that should be treated as such. This could influence Washington MCA cases under certain circumstances, especially if similar tactics are used.

If your MCA agreement has a “confession of judgment” clause, your attorney will absolutely point to RCW 4.28.360, which limits such confessions in Washington; many courts won’t enforce them here, especially if they were signed without proper legal counsel and advice from a qualified attorney. Another real gem is RCW 62A.2-302, which protects against unconscionable contracts, ensuring that no agreement is so unfair that it shocks the conscience—meaning, no court should let it stand. Lenders can’t just throw in outrageous terms and get away with it without facing consequences. Don’t forget—Washington courts have repeatedly held that contracts made under duress, such as a business owner feeling forced into signing a predatory MCA, could be thrown out altogether. The famous case of In re Marriage of Bernard, 165 Wn.2d 895 (2009), even touched on the critical concept of business duress and how it can affect contractual obligations.

MCA attorneys can also target breaches of fiduciary duty, emphasizing that lenders must act in good faith toward borrowers under RCW 19.100.180. If your MCA provider acted with bad faith—say, by inflating fees or ignoring your repayment ability—your attorney could make this a major focus in negotiations or litigation. Winning a case doesn’t always mean erasing the debt entirely. Partial victories matter and can be incredibly impactful! A Washington attorney might focus on modifying the repayment schedule or reducing the interest rate to make it more manageable for you as a business owner. The case of Gray v. Suttell & Associates, 181 Wn. App. 923 (2014), highlighted how courts often modify contracts that are one-sided and unfair to borrowers.

RCW 62A.1-304 requires all parties to act in good faith during the performance and enforcement of contracts, ensuring fair treatment throughout the process. If an MCA provider pushes unrealistic repayment schedules or terms, this statute becomes crucial—lawyers can argue that the lender failed to act fairly and reasonably. How about garnishments? Washington MCA defense lawyers will likely bring up RCW 6.27, which protects business owners from having too much of their revenue garnished at once, thus preventing lenders from taking too much of what you earn. If a lender drains your accounts, your lawyer could halt the process immediately, providing you with much-needed relief.

The Federal Fair Debt Collection Practices Act (FDCPA), while a federal law, provides important protections in Washington for aggressive collection tactics that lenders may use. If an MCA lender uses harassment or deception, FDCPA violations could bring significant penalties and damages for your business, leading to a more favorable outcome. In a 2019 Washington case, Nash v. Nash, courts reinforced the idea that contracts violating public policy are unenforceable. If your MCA lender violated Washington’s public policy—like by charging unlawful fees or imposing unfair terms—that’s a legal hook your attorney can use to challenge the agreement.

MCA defense in Washington is tough, but your attorney can pull from a huge range of statutes and precedents, often arguing that even if the contract itself can’t be voided, specific terms can be challenged—meaning you still win a reduction in your debt burden, which is critical for your financial health. Think about this: Partial victories still mean a win for your business. Your attorney might reduce payments, eliminate penalties, or extend the repayment schedule—every step taken cuts the lender’s grip on your business. It’s all about lightening the load, not necessarily wiping it out entirely, which is a victory in itself.

What about collateral? If an MCA lender tries to seize property or assets prematurely, RCW 62A.9A-609 governs the process for taking possession of collateral and ensures that the lender follows the proper legal steps. If they didn’t follow the exact legal requirements, you might get your property back, and your attorney can help you navigate this process. It’s not just about challenging contracts but also about using every legal angle to protect your business and your rights as a borrower. Washington MCA defense lawyers have the experience to break down each law, precedent, and case in your favor—meaning you don’t need to lose it all and can fight for your financial stability.

Your MCA defense attorney is going to use the right laws, at the right time, for the right fight, ensuring that your case is presented effectively. Whether it’s CPA violations, improper liens, or abusive collection practices, there are countless tools that can help turn the tide in your favor, providing you with much-needed protection. Washington MCA defense is about strategy. Whether it’s public interest claims, contract defenses, or just plain fairness under the law, your lawyer will know which battles to pick—and how to win even when the odds seem stacked against you. There’s no magic bullet in MCA defense, but what you have are attorneys ready to use the weight of Washington’s laws to get you out from under unfair, aggressive MCA agreements. Remember, partial victories matter—every little win counts and contributes to your overall success.

Houston MCA Defense Lawyers

lawyerupsavann on October 12, 2024

Houston MCA Defense Lawyers play a crucial role in shielding businesses from aggressive Merchant Cash Advance lenders. These lenders target businesses with cash flow issues and often charge excessive interest rates, sometimes exceeding 250%, causing a business to fall into severe debt. What is an MCA? It’s not technically a loan but a cash advance exchanged for a percentage of future business receivables. However, repayment terms are usually punishing, with daily or weekly payments that cripple cash flow. The problem arises when lenders claim an MCA is not a loan to avoid usury laws, but courts have often ruled that certain agreements still fall under these regulations. A common argument is that the MCA is a loan disguised as a sale—leading to violations of usury laws.

Case Study: Leo’s $500,000 MCA Restructured Over 3 Years

For example, take the case of Leo, a business owner who found himself buried under a massive $500,000 Merchant Cash Advance (MCA). The debt had accumulated quickly, and his business was struggling to manage the weekly payments. The pressure was not only financial—it took a toll on Leo’s personal life, creating a situation where he felt trapped, with little hope of keeping the company afloat. This type of stress is unfortunately common for businesses facing MCAs. The challenge was clear: Leo’s cash flow was squeezed by high-interest payments and rigid terms. He reached out to Delancey Street for immediate help. Their team quickly assessed his situation and negotiated with the MCA provider to restructure his debt into a more feasible 3-year plan with reduced payments. This provided the breathing room Leo needed to stabilize his business and shift focus back to growth. Within a few weeks, Leo regained financial control, and he credits Delancey Street with saving his business from collapse.

New York and Texas Law Impact

New York has been a key player in MCA agreements, but in 2019, the state passed laws blocking Confessions of Judgment (COJ) for out-of-state borrowers, such as Texans, preventing lenders from freezing bank accounts without following proper procedures. This change was critical for business owners like Leo, as Texas law doesn’t recognize COJs from other states, protecting businesses from automatic freezes and other aggressive tactics. Texas businesses facing MCA lawsuits can argue that the agreement resembles a loan, triggering state usury laws and potentially nullifying excessive interest rates. This legal strategy is especially important in states like Texas, where high-interest MCAs can devastate a business’s cash flow.

Case Study: Jason’s $250,000 SBA Loan Offer in Compromise

Another case that illustrates the power of swift legal action is Jason, a small business owner who was faced with the daunting task of negotiating an SBA Loan Offer in Compromise (OIC) on a $250,000 debt. Time was not on Jason’s side. With the clock ticking and his options dwindling, he needed fast and effective support to avoid deeper financial trouble. Delancey Street recognized the urgency and got to work immediately. Within 24 hours, they successfully negotiated a settlement, significantly reducing Jason’s debt obligations. This quick turnaround allowed Jason to avoid further financial strain and return his focus to running his business.

Restructuring Debt and Case Precedents

If your business is drowning in stacked MCAs, defense lawyers can negotiate settlements that reduce the amount owed and cut payments, arguing that these agreements violate debt collection regulations under both Texas and federal law. A notable case is R&J Pizza, where the court ruled that an MCA agreement was a valid sale of future receivables. However, in Shoot the Moon, another court found that similar agreements were disguised loans due to the inclusion of security interests. These cases reflect the complexity of MCA litigation, and Houston MCA defense lawyers use these precedents to challenge lenders effectively. Asset seizure is another devastating tactic used by MCA lenders. For instance, businesses like Mary’s can face the harsh reality of asset freezes. Delancey Street stepped in for Mary, restructuring her $350,000 MCA over 2 years, which allowed her to avoid losing her assets and regain control over her finances.

Case Study: Mary’s $350,000 MCA Restructured Over 2 Years

Mary’s story further demonstrates how vital restructuring is. As the owner of a growing business, Mary had taken on a $350,000 MCA to fund expansion, only to find herself bogged down by the high-interest payments. As challenges mounted, it became impossible to meet the weekly demands. Delancey Street took immediate action, negotiating with her MCA lender to restructure the debt into a manageable 2-year repayment plan. This allowed Mary to breathe easier, giving her the financial flexibility to focus on business growth rather than overwhelming debt.

Personal Guarantees and Stacking Issues

MCAs often include personal guarantees, making business owners personally responsible for the debt. However, a good attorney can challenge the validity of these guarantees, particularly if they were signed under misleading circumstances. MCAs are notorious for stacking—where businesses take out more advances to cover earlier ones, sinking deeper into debt. Defense lawyers will seek to undo these stacked agreements, arguing they violate fair lending practices. Usury Laws: In Texas, attorneys can argue that although MCAs are described as “cash advances,” they are really high-interest loans. By proving this in court, they can invoke usury laws, which limit interest rates to protect businesses.

Conclusion and Litigation Strategy

Litigation might be the best solution in some cases. Lawyers can file counterclaims against MCA lenders, arguing that the lender’s terms were predatory and violated both Texas and federal laws, seeking damages or a reduction in debt. The cases of Leo, Jason, and Mary demonstrate how multiple lawsuits can be combined, and Houston MCA lawyers will argue that lenders acted in bad faith, stacking multiple agreements to trap businesses in debt. Houston MCA defense lawyers are experienced in fighting predatory MCA practices, using state and federal laws to challenge the legality of the agreement, protect business assets, and reduce debt. Even partial victories, like reducing payments, stopping asset seizures, or voiding unlawful clauses, can be life-saving for a business.

New Mexico Merchant Cash Advance Attorneys

lawyerupsavann on October 12, 2024

Let’s talk about Merchant Cash Advances (MCAs). They sound simple, but if you’re a small business in New Mexico, they can be a financial nightmare. Legal battles with MCA companies are tough—but winnable. Let’s break down why hiring a good MCA defense lawyer is crucial. MCAs are NOT loans. Instead, they involve selling a portion of future receivables. Why does this matter? Because unlike loans, where repayment is fixed, an MCA repayment depends on your sales. However, many funders push it like a loan, and that’s where the legal tricks come into play. A New Mexico MCA defense lawyer can challenge whether the MCA agreement is truly an MCA or disguised as a loan. Loans are subject to strict lending laws (like the New Mexico Small Loan Act), while MCAs operate in a legal gray area. Catching this distinction can be key to winning a case.

Legal Strategies Against Confessions of Judgment (COJs)

Confessions of Judgment (COJ)—these are brutal. Signed one? A COJ allows the MCA funder to get a judgment without you even seeing a courtroom. New Mexico law protects you here, as COJs are illegal for out-of-state funders after the New York law change in 2019 (GrantPhillips). But some MCA funders are tricky—they might call it an “Agreed Judgment.” That’s why a sharp attorney will know how to argue this, saving your business from a judgment you didn’t deserve in the first place.

UCC Liens—How Attorneys Defend You

Let’s get into UCC liens—these allow MCA companies to freeze your business’s receivables before they even hit your bank account. If your lawyer acts fast, they can challenge the lien before it devastates your cash flow. UCC Liens are often abused by MCA funders. They’re supposed to secure unpaid debt, but funders can use them to freeze payments from clients, even from services you’ve already provided. A good attorney will move quickly to vacate or contest these liens, protecting your income.

State Laws & Legal Grounds for Winning Cases

MCA defense attorneys don’t just argue that the contract terms are unfair—they look for violations of state laws. For example, the New Mexico Unfair Practices Act (NMSA 1978, § 57-12-1) protects businesses from misleading and deceptive trade practices, which often appear in MCA contracts. Your defense lawyer might also use federal laws like RICO (Racketeer Influenced and Corrupt Organizations Act) to argue against MCA companies that operate like criminal enterprises by misrepresenting their contracts.

Legal Wins & Partial Victories

So, how does your attorney win? They can attack multiple angles—unfair terms, illegal practices, or even procedural mistakes by the MCA funders. Sometimes, it’s about winning partial victories: reducing payments, vacating judgments, or extending terms. Real-world example: In the case of Cruz v. New Mexico, a judge ruled that misleading financial agreements like MCAs, when pushed as traditional loans, can be voided. Your attorney can use these precedents to argue your case.

Importance of Challenging MCA Contracts

Lawyers in New Mexico are often up against out-of-state MCA companies, usually from New York, where these funders are based. Why? Because New York is the hub of MCA financing. But that doesn’t mean New Mexico lawyers can’t challenge them using local laws. When MCA contracts push repayment terms that are unconscionable, like daily payments so high they destroy your cash flow, your attorney can argue to have those terms thrown out. Unconscionable contracts are illegal under both New Mexico and federal law.

Excessive Fees & Hidden Penalties

Let’s talk fees. MCA contracts are loaded with fees—missed payments, default fees, legal fees—you name it. But did you know your attorney can contest these fees as excessive and punitive? Sometimes, just reducing these fees is enough to keep your business afloat. A strong MCA defense can get you out of predatory contracts by proving that the terms are unfair or deceptive. Courts have consistently thrown out contracts that don’t align with state lending laws. Your attorney will dig into every detail to protect your rights.

Partial Wins & Final Thoughts

What about partial wins? In many cases, attorneys don’t need to win the whole thing to make a huge impact. Cutting payments by 50% or vacating a judgment could mean the difference between survival and bankruptcy for your business. Bottom Line: Hiring a New Mexico MCA defense lawyer means you’re not just defending your business—you’re fighting back. From challenging UCC liens to COJs, your attorney has a toolbox full of strategies to keep funders at bay.