Denver Merchant Cash Advance Legal Help – Attorneys, Debt Settlement
Merchant cash advances (MCAs) can seem like an easy way for Denver business owners to get quick capital, but they often come with predatory terms and cripplingly high interest rates. If you took out an MCA and are now facing aggressive collection tactics or even lawsuits, don’t panic – legal help is available. There are Denver attorneys who specialize in defending business owners against MCA lenders and settling debts on favorable terms.
The Trouble With Merchant Cash Advances
A merchant cash advance essentially works like a business payday loan. An MCA company gives you an upfront lump sum of cash in exchange for a percentage of your future credit card and debit card sales over a set period of time. The catch is that the repayment terms are often outrageous – some MCA contracts stipulate daily repayment rates of 20% or more of a business’s gross sales.Within a few months, many business owners find themselves falling behind on payments. That’s when the aggressive collection efforts kick in. Some MCA lenders will barrage you with calls, letters, and even threats of lawsuits or seizing your assets. They may even try illegal tactics like harassing your customers or freezing your business bank account.According to Colorado’s attorney general, nearly 96,000 high-cost MCA loans were issued in the state in 2021 alone. It’s suspected that up to 20% of those borrowers are now facing aggressive collection efforts and predatory lawsuits.
Beware of Confessions of Judgement
One of the most alarming tactics used by predatory MCA lenders is getting business owners to sign a “confession of judgement” along with the loan contract. This gives the lender the right to seize assets like bank accounts or property without even going to court if the borrower falls behind on payments.As attorney Grant Phillips explains, “Many Merchant Cash Advance Funders try to include these documents in their contracts. For example, they may call it an ‘Affidavit of Confession of Judgement’ or a ‘Consent to Entry of Judgement.’ It allows them to automatically win a lawsuit against you if you default on payments.”Signing a confession of judgement strips you of your legal rights – lenders can freeze accounts and take property without even giving you a chance to dispute the debt in court. This practice is now illegal for loans made to Colorado residents under a 2019 New York law, but some lenders still try to sneak confessions of judgement into contracts.Having an attorney review any merchant cash advance agreement is essential to avoid this predatory practice. An experienced lawyer can also help get improperly obtained confessions of judgement invalidated.
Settlement May Be The Best Way Out
If you’re already caught in the clutches of a predatory MCA lender, trying to settle the debt may offer the quickest and least painful escape route. Skilled Denver debt relief attorneys can often negotiate deals for as little as 20 to 50 cents on the dollar.Settlements typically require a lump sum payment to close out the account. The attorney fees are also deducted from the settlement amount. But accepting a one-time loss is often better than continuing to bleed money from endless non-negotiable payments.Debt settlement can stop collection harassment and predatory lawsuits in their tracks. And when done correctly under the guidance of legal counsel, settlements don’t damage credit scores. The MCA lender simply writes off the remaining balance, and the account is closed.
4 Defenses Against Merchant Cash Advance Lawsuits
For business owners already facing legal action over an MCA debt, it pays to connect with a Denver collections defense attorney immediately. In addition to negotiating settlements, lawyers can raise multiple defenses to have lawsuits dismissed or judgements overturned.
1. Improper Service
To bring a lawsuit, lenders must properly notify (serve) the defendant. Many fail to follow strict legal protocols for serving businesses, rendering lawsuits invalid.
2. Invalid Agreement
Attorneys also look for ways the original MCA contract fails to comply with Colorado laws. Signing under duress, vagueness, or hidden terms can all make agreements unenforceable.
3. Unfair Lending
Legal teams dig into lenders’ practices to uncover violations of lending and consumer protection laws. Such violations may cancel all repayment obligations.
4. Statute of Limitations
If too much time has passed between default and filing of a lawsuit, the statute of limitations may have expired. This also invalidates legal action.
Choose Attorney Representation Carefully
With the right lawyer, Denver business owners can escape predatory MCA loans and crushing lawsuit judgements. But it’s critical to choose an attorney with specific experience fighting merchant cash advance lenders. Consider these tips when selecting representation:
– Specialization Matters
General practice lawyers often lack the skills to effectively counter MCA companies’ aggressive legal tactics. Attorneys who focus specifically on MCA cases or debt collection defense make better advocates.
– Read Reviews
– Meet First
Most lawyers offer free case evaluations. This is the time to assess their experience with MCA collections and lawsuits. Also make sure you feel comfortable with their style and level of customer service.
– Beware Upfront Fees
While attorneys may request retainers to initiate cases, steer clear of those demanding hefty upfront payments. Ethical lawyers collect fees only as services are rendered.Getting experienced legal help provides the best chance of defending against aggressive MCA lenders. And when negotiating settlements simply isn’t feasible, attorneys adept at collections defense can fight to overturn judgements against Denver business owners. Don’t hesitate to contact dedicated merchant cash advance attorneys serving the Denver area for a free consultation.