Bakersfield Merchant Cash Advance Legal Help – Find the Right Attorney for Your Business
Getting a merchant cash advance can seem like an easy way for small businesses in Bakersfield to access quick capital. Unlike traditional bank loans, merchant cash advances don’t require strong credit scores or long application processes. The funds are easy to qualify for and can be deposited in your account within days.However, merchant cash advances also come with risks that many business owners don’t fully understand. The terms are often unfavorable, with extremely high effective interest rates and daily repayment amounts that can cripple cash flow. Many companies regret taking out a merchant cash advance and struggle to keep up with payments.If you took out a merchant cash advance for your Bakersfield business and are now facing legal issues or debt troubles, don’t panic. You have options. Hiring an experienced business finance attorney can help you negotiate better repayment terms, reduce fees, defend against lawsuits, and more.This guide covers everything Bakersfield business owners need to know about finding legal help for merchant cash advance issues, including:
- Common legal issues with merchant cash advances
- Finding the right lawyer
- Debt settlement and negotiations
- Defenses against MCA lawsuits
- Improving your legal position
Let’s start with understanding the most common legal problems businesses face after taking a merchant cash advance or MCA.
-Common Legal Issues Businesses Face with Merchant Cash Advances
Unlike traditional small business loans, merchant cash advances (MCAs) are not really loans at all. MCA companies purchase a percentage of your future sales at a steep discount, then take daily payments until the full amount plus fees are repaid.This process leaves lots of room for legal disputes and issues, such as:
Excessively High Effective Interest Rates
While MCA companies claim they are not charging interest, the amount you end up repaying is usually equivalent to 50-400% APR or more. These absurd rates may be unenforceable due to state usury laws that cap interest charges.
Breach of Contract Lawsuits
MCA contracts often contain language stating that if you default on daily payments, the full outstanding amount becomes immediately due. MCA companies frequently sue business owners in breach of contract lawsuits when payments fall behind.
Aggressive Debt Collection Efforts
Behind on repayments? MCA collectors may harass you with nonstop calls, threats to seize assets or bank accounts, or other high-pressure tactics. Their actions could violate consumer protection laws.
-Confusing and Predatory Contract Terms
Merchant cash advance agreements contain complex legalese that hides unfair terms. With help from an attorney, you may be able to challenge issues like unreasonable default interest rates.
Getting Out of an Unaffordable Agreement
If the repayment amounts stretch your finances too thin, you may be able to negotiate a settlement for less than the full balance. In some cases, the contract could potentially be cancelled.The good news? An experienced lawyer can help you respond to all these issues and more. Let’s look at how to find the right legal help for your business.
How to Find the Best Attorney for Your MCA Case
With the right lawyer on your side, you can better protect your Bakersfield business from merchant cash advance legal issues. However, finding an attorney with relevant experience can be tricky.You want a lawyer who understands the intricacies of MCAs and other alternative business financing. Not all attorneys have handled these types of cases.Here are smart tips for vetting and selecting legal counsel:
Look for Experience Handling Merchant Cash Advance Disputes
Ask attorneys specifically whether they have represented clients in MCA lawsuits, negotiations, or other disputes. Verify they understand how merchant cash advances work and the common legal issues that arise.
Search State Bar Association Directories
State bar associations like the California Bar Association offer searchable directories of licensed lawyers. Filter by practice area and location to find qualified local attorneys.
-Read Online Reviews
Check Google, Facebook, Avvo, and other sites with client reviews of lawyers. This helps gauge things like communication skills, legal knowledge, and case success rates.
Ask About Alternative Fee Arrangements
Hourly billing may be unaffordable. Inquire if lawyers offer alternative fee options like flat rates, payment plans, or contingency arrangements for debt settlement cases.
Interview Multiple Attorneys Before Deciding
Talk to several lawyers before choosing one. Most offer free case evaluations and consultations. Come prepared with contracts and other documents for them to review.By taking time to research and compare multiple attorneys, you can find affordable, trustworthy legal help tailored to your business’s unique merchant cash advance situation.
-Using Legal Help to Settle MCA Debts
Falling behind on payments usually means the merchant cash advance company starts demanding full immediate repayment of your outstanding balance. These companies may refuse to negotiate settlements on their own.Hiring a lawyer levels the playing field. Attorneys have the legal expertise to negotiate debt relief in your favor.
Debt Settlement Letters
Your lawyer can send the MCA company an official debt settlement letter stating your financial hardships and proposing a discounted lump sum payment to resolve the debt. Data shows lenders often accept settlement offers that are 60% less than the balance owed.
Legal Defenses Against Repayment
Experienced attorneys know what arguments and laws give businesses the best shot at debt forgiveness or reduced settlements. For example, if interest rates exceed state limits, the contract may be only partially enforceable.
Lawsuits & Alternative Dispute Resolution
If settlement talks fail, your lawyer may recommend filing a lawsuit to invalidate the agreement or trigger alternative processes like arbitration and mediation. The threat of court action motivates many MCA companies to negotiate reasonable compromises.
Bankruptcy Protection
While bankruptcy negatively impacts your business’s credit and finances, it may still beat the crippling repayment terms of a merchant cash advance. Under Chapter 7 or Chapter 11 bankruptcy, your debts could potentially be discharged entirely or restructured. Consult with legal and financial experts to weigh the pros and cons of this option for your situation.With an attorney’s help, you gain leverage to negotiate better repayment terms or even a fraction of the balance owed. Don’t wait until legal action is taken against you – be proactive about resolving debts.
What Legal Defenses Work Against MCA Lawsuits?
Despite your best efforts to stay current with payments, an unexpected slow season or financial hit may still cause you to default on your merchant cash advance agreement. Up to 75% of businesses that take MCAs end up getting sued for non-payment.The good news? In their rush to fund as many merchants as possible, MCA companies often make mistakes in contracts that violate laws. An experienced attorney can identify potential defenses to beat or reduce lawsuit damages.Here are some of top defenses businesses have used to fight MCA lawsuits:
Unconscionability
If a contract contains grossly unfair or one-sided terms that unreasonably favor the MCA company, you may argue it is invalid and unenforceable. State laws against predatory lending or usury may bolster your case.
Breach of Contract by the MCA Company
Review your agreement to check for any provisions the MCA company failed to fulfill, like providing statements or proper notifications. Their own contractual breaches weaken their lawsuit position.
Fraudulent Inducement
Shady sales tactics like false promises of easy qualification or absurdly low repayment amounts could potentially nullify the agreement. Proving fraud, however, has a high legal burden.
Improper Account Debits
MCA companies sometimes illegally debit business accounts without proper notice or beyond maximum daily limits. This violates contract terms and consumer protection statutes.The viability of defenses depends heavily on state laws and the specific facts of your case. Having an attorney thoroughly analyze the agreement and build a customized legal strategy makes all the difference.While scary and stressful, MCA lawsuits don’t necessarily mean financial ruin for your business. Fight back with experienced legal counsel.
How Lawyers Can Improve Your Legal Position
Even if you aren’t currently facing legal issues or debt collection pressure, having a lawyer review your merchant cash advance agreement is wise. Identifying potential problems now makes it easier to fix them or strengthen your defenses down the road.Here are key ways lawyers can improve your legal position:
Reviewing the Contract for Unfair Terms
Shady MCA companies often bury illegal or non-compliant clauses in walls of dense legalese. Attorneys know what to look for and will explain issues in plain English.
Sending Demand Letters Requesting Modifications
If the agreement contains potentially unenforceable provisions, your lawyer can send a formal letter asking the MCA company to remove or amend them. Data shows lenders frequently agree to improve contract terms when faced with legal demands.
Advising On Compliance With Repayment Notices
Many businesses trip up by not closely following notification requirements for payment changes or alleged contract breaches by the MCA company. Your attorney can offer compliance guidance to avoid pitfalls.
Collecting Evidence In Case Future Disputes Arise
Think the agreement seems fishy? Ask your lawyer to help you gather and preserve documents, call recordings, emails, and other evidence of questionable conduct by the MCA company. This evidence can later support legal defenses and arguments.By being proactive about getting legal advice, Bakersfield businesses take control in case merchant cash advance disputes emerge down the road. Don’t get stuck reacting to lawsuits or collection pressure without knowing your rights.
Find the Right Lawyer to Resolve Your MCA Issues
While merchant cash advances may provide fast, no-collateral financing, they often cause more struggles than they cure. Excessive fees, repayment burdens, lawsuits, and other legal headaches frequently plague business owners.If your Bakersfield company is facing MCA-related legal issues or debt troubles, partner with a knowledgeable lawyer. Attorneys experienced in merchant cash advance disputes can help you defend your rights, negotiate better repayment terms, and resolve debts for less than you owe.Use the guide above to help you find the most qualified legal counsel for your unique situation. The sooner you enlist help, the more leverage you have against predatory MCA companies. With an attorney on your team, you can make smart, informed decisions to resolve merchant cash advance problems and get your business back on track.