Los Angeles Merchant Cash Advance Legal Help – Attorneys, Debt Settlement
Merchant cash advances can provide much-needed capital for small businesses, but they also come with risks. If your business has fallen behind on payments or gotten into legal trouble over a merchant cash advance agreement in Los Angeles, you may need legal help.LA business legal help
Understanding Merchant Cash Advances
A merchant cash advance isn’t technically a loan. Instead of borrowing money that you repay with interest, you sell a portion of your future sales revenue to an MCA company in exchange for a lump sum.The MCA company then takes a fixed percentage of your daily credit card sales until the full amount is repaid. There’s no set repayment schedule – the faster your business generates sales revenue, the faster you pay back the advance.
-Common Legal Issues with Merchant Cash Advances
While merchant cash advances provide easy access to capital, they also come with risks:
High Costs
The fee charged by an MCA company essentially works out to an annualized interest rate over 100% in many cases. The actual cost may not be clear initially.
Daily Repayments
Having a percentage of each day’s sales automatically drafted can strain cash flow, especially on slow business days.
Aggressive Collections
If an MCA company feels repayments have slowed too much, they may attempt aggressive collections efforts like debiting bank accounts without notice.
Legal Action
Some MCA companies sue businesses that fall behind on payments. Even small payment delays can trigger default notices and threats of legal action.
Getting Legal Help with Merchant Cash Advances
If you’re facing any of the above issues with an MCA company, getting legal help from a business attorney experienced in this area is crucial to protect your rights.
Responding to Demand Letters
If you receive a default notice or demand letter from an MCA company, don’t ignore it. Failure to respond can allow the company to seek a default judgment against your business. An attorney can help craft an appropriate response.
Negotiating Settlements
If you can no longer afford payments or the MCA agreement no longer makes financial sense, an attorney may be able to negotiate a settlement for less than the full amount owed.
Defending Against Lawsuits
Should the MCA company file suit, a legal defense is necessary to avoid a damaging judgment. In some cases, the agreement terms may be legally unenforceable.
Seeking Damages
If the MCA company has taken illegal actions like unauthorized bank account withdrawals, your business may be entitled to monetary damages through a counterclaim or separate lawsuit.
Finding the Right Legal Help in Los Angeles
Seeking assistance from lawyers with specific experience fighting merchant cash advance lawsuits and negotiating MCA agreements is key. Be sure to ask about:
- Track record – How many similar cases have they handled and what were the outcomes? Do they have experience negotiating MCA settlements?
- Payment plans – What payment arrangements are available if legal fees are currently unaffordable for your business?
- Personal attention – Will you work directly with the lead attorney or be passed off to less experienced associates?
Also research lawyers carefully via sites like Avvo and look for client reviews that give insight into their reputation and results.
Options for Legal Help Defending MCA Claims
Depending on your specific situation, different legal help options may make sense.
Hiring a Private Lawyer
Retaining an experienced business litigation lawyer to defend, settle, or sue over an MCA contract will provide one-on-one guidance but can be expensive. Be sure to understand what’s included and any additional costs that may arise depending on how the case progresses.
Legal Insurance
If you have business owner’s legal insurance as part of your existing business insurance policy, this may cover some or all of the costs of an attorney depending on the type of claim. Check your specific policy details.
Legal Aid Organizations
If your financial situation makes hiring a private attorney difficult, contact public legal aid organizations to see if you qualify for free or low-cost legal help based on your income. Resources are limited so cases are prioritized by need.
What Laws Apply to Merchant Cash Advances?
Most merchant cash advance agreements specify that New York law will apply in any legal dispute since that state has established precedents governing these transactions. Key laws include:
- New York General Obligations Law §5-501 – Sets maximum interest rates for loans under $500,000. MCA companies claim this doesn’t apply to their products.
- New York General Business Law §349 – Prohibits deceptive business acts and practices. Predatory MCA tactics may violate this.
However California law may also protect small businesses from unfair contract terms or aggressive collections by MCA companies. Key laws include:
- California Commercial Code §9318 – Limits rights to take funds from a debtor’s bank account without consent.
- California Business & Professions Code §17200 – Bans “unfair competition” including fraudulent, unlawful or unfair business acts.
An attorney can advise which laws offer the best protections and claims given your specific situation. Don’t hesitate to contact experienced legal help regarding any issues with a merchant cash advance agreement. Protecting your business is vital.