Mississippi Merchant Cash Advance Legal Help
Merchant cash advances (MCAs) have become an increasingly popular way for small businesses in Mississippi to access quick financing. However, these advances come with high costs and strict repayment terms that can put extreme pressure on cash flow. If your business is struggling under the weight of MCA debt, there are legal options to find relief.
How Merchant Cash Advances Work
Unlike traditional small business loans, merchant cash advances provide an upfront lump sum in exchange for a percentage of future credit card and debit card sales. There is no set repayment schedule – instead, the MCA company takes a fixed daily or weekly amount from your credit card processing account.The advantage is fast access to capital with minimal eligibility requirements. But the costs are exceptionally high:
-- Advance rates typically range from 1.10 to 1.50. So for every $1,000 received, you repay $1,100 to $1,500.
- The equivalent APR, when fees and compounding are factored in, can exceed 200% or even 300%.
With no fixed end date, you repay the advance for as long as it takes at your rate of sales. If business slows, you still owe the same daily/weekly amount, which can quickly become unmanageable.
Legal Protections for Mississippi Businesses
While MCAs skirt usury laws by technically being cash purchases rather than loans, consumers do have protections:
1. Required Disclosures
Under the Mississippi Check Cashers Act, MCA companies must provide certain disclosures about rates, fees, and terms. Failure to do so may invalidate the agreement. An attorney can review your contract for violations.
2. Interest Rate Caps
In 2019, Mississippi capped MCA interest rates at 55%. However, many lenders have found loopholes by charging additional fees. A lawyer can analyze the effective rate and determine if it legally exceeds 55%.
-3. Unfair Practices Protections
The Mississippi Consumer Protection Act prohibits unfair lending tactics. If you were deceived or coerced into accepting an MCA, the contract may not be enforceable.
Working With a Mississippi MCA Attorney
If you decide legal help is needed, here are some of the ways an attorney can assist:
- Review the MCA agreement – Analyze all terms, disclosures, rates, and fees for violations
- Send dispute/validation letters – Challenge anything unlawful or unclear in writing
- Negotiate settlements – Work to reduce principal balance and/or daily repayment amount
- Defend collection lawsuits – Assert legal defenses if sued for breach of contract
- Stop harassment – Send cease and desist letters if unlawful collections practices
- Explore bankruptcy – Discuss if Chapter 7 or 13 may be a good option
Reliable Mississippi MCA attorneys include:
- Grant Phillips Law – Long history of MCA cases
- Kenneth H. Dramer, P.C. – Reasonable fees for services
- McCarthy Lawyer – Debt settlement experience
Don’t Wait to Get MCA Help
The further behind you fall on payments, the harder it becomes to satisfy an MCA debt. If your business is struggling, consult an attorney sooner rather than later to understand all your options. There are ways to reduce or even eliminate what you owe and stop aggressive collections activities. With the right legal help, you can regain control of your finances.
Frequently Asked Questions
What are some common problems with merchant cash advances?
Some common issues that business owners face with merchant cash advances include:
-- Excessively high interest rates and fees exceeding 100-300% APR
- Fixed daily/weekly payments that don’t fluctuate with sales
- Personal guarantees holding the owner liable even if the business fails
- Confusing contract terms and lack of complete disclosures
- Harassment from collectors and threats if unable to make payments
- Lawsuits, wage garnishments, and bank levies to forcibly collect
What legal defenses can be used to fight an MCA lawsuit?
Potential defenses in MCA lawsuits include:
- Usury – Interest rates above 55% violate Mississippi lending laws
- Unconscionability – Unfair terms make the contract unenforceable
- Breach of contract – The MCA company did not fulfill all obligations
- Unjust enrichment – The lender seeks unreasonable overpayment
- Bad faith – The MCA company misled or defrauded the business
- Statute of limitations – Too much time has passed to sue
Can an MCA be discharged in bankruptcy?
Yes, merchant cash advances can be discharged through business or personal bankruptcy, typically Chapter 7 or 13. When balances and payments become unmanageable, bankruptcy provides a legal way to eliminate this debt and make a fresh start.As experienced Mississippi bankruptcy attorneys will explain, filing Chapter 7 liquidation stops collections activity and discharges qualifying debts. Or Chapter 13 reorganization allows you to repay only some of what you owe over 3-5 years.With either approach, the MCA debt is eliminated without the constant pressure and threats from collectors. Just be sure to consult your lawyer before voluntarily repaying any debts prior to your bankruptcy discharge.