When debts become too much seek merchant cash advance lawyers
After the 2008 crisis, a new kind of finance loan system came into place – the Merchant Cash Advance or the Business cash Advance. It is also popularly known as the credit card factoring. This was an easy solution for those seeking loans which the traditional banks are unwilling to underwrite.
Every business owner knows the importance of maintaining cashflow. But businesses are often subject to several fluctuations which can be seasonal, or dependent on other variables like thepolitical scenario in the region, sudden climate changes, unforeseen competition. Under such circumstances, it is difficult to maintain the financial stability of a small unit. Liquid cash is often required to purchase inventory, raw materials, repairs of equipment, thehiring of human resources and several other factors.
This is the reason several small businesseslook at merchant cash advance as an attractive solution. Added to that is the access to rapid cash without too much documentation, no unnecessary legalese and flexible repayment which make it even more appealing.
How does a MerchantCash Advance Funding work?
It is different from the traditional bank loans and short-term commercial loans that one avails during a financial crisis. Unlike other unsecured business loans, this cash advance is not a loan but an advance against your future credit card sales. When you opt for a merchant cash advance you get a lump sum money that the lender collects backs as daily as a percentage of the credit card sales. The total amount collected is dependent on the factor rate.
This industry still doesn’t have any concrete regulations and rules and is not subject to scrutiny leading to aggressive behavior from merchant cash advance funders when a business defaults.
When do debts creep in
If the business is experiencingfinancial difficulties it becomes difficult to cope up with the daily repayments which the merchant cash advance company withdraws from your account every day. As a result, many a time the borrowers default and face severe consequences like poor credit reporting and lawsuits. Defaulters mustalso face aggressive debt collection behavior from the lender's company.
This also leads to the premature death of a business.
Role of our Merchant Cash Advance lawyers
When things become difficult and you areapproached by a collection agent from a MCA you need to seek legal advice. There are several business collections lawyers who know the law and the unscrupulous ways of debt collectors. They will help you solve your debt problems and teach you how to get debt relief.
Clauses to look out for in your MCA contract
Almost all MCA agreements have two clauses which are often misused by these MCA’s.
Acceleration clause: When you default your daily payments or change your bank account this clause will come into play and the balance amount becomes due.
Personal guarantee: Usually merchant cash advance companies apply for a UCC lien wherein they can seize all the property of the business should it default. Then there will be the2nd position, 3rd position, 4th position and 5th position MCA who will stake their claim after the 1st position MCA though there will nothing left for them. The BCA can also bring a lawsuit against the personal guarantor.
Confession of Judgement: Often in the guise of goodwill the merchant advance funding company will ask a business on the brink of default to sign the Confession of Judgement to pardon some debt. DO NOT Sign it. Because once you do it the company can straightway seek judgment without even paying heed to the underlying case.
Aggressive debt collection methods
Debt collectors will start to harass you at home and at business. The recovery process adopted by MCA’s is aggressive because they are in it for profit and because often there is no collateral they need to resort to unscrupulous methods of recovery.
How should you protect yourself?
You can speak to our merchant cash advance lawyers who will guide you on how to reduce your debts. Our experienced team of lawyers is adept at handling all kinds of debts and also in defending individuals and businesses from debt collectors. Furthermore, they will also initiate amicable settlements between the two parties through skillful negotiations.
Our working method
Our lawyers will first analyze a situation including the number of debts you owe, to whom, how much and if they are current or default. They will update you on the state of affairs and discuss the present state of your business and your assets.
Once you qualify for our services like merchant cash advance restructuring or business debt settlement we will help you make an informed choice.
Our lawyers will work on plans that will restructure your cash advances and help you keep afloat during the crisis.
They will look at affordable arrangements to prevent a lawsuit and filing of bankruptcy.
Conclusion
Merchant cash Advance is a long term solution to kick start your business venture but the same can backfire when you fail to keep up with therepayment schedule. Whenever you feel you might default and are overwhelmed with the financial crisis you need a helping hand to keep your head above water.
Our capable team of lawyers is easily accessible for discussion. Approach them to get your act together and fight against aggressive debt collectors.