Oklahoma Merchant Cash Advance Legal Help – Attorneys, Debt Settlement
Merchant cash advances can seem like an easy way for small businesses to get quick cash, but they often come with predatory terms and aggressive collection tactics that can put companies in financial jeopardy. If your Oklahoma business is struggling with merchant cash advance debt, there are legal defenses and debt relief options that may help. Consulting with an experienced business attorney is crucial to protect your rights.
How Merchant Cash Advances Work
A merchant cash advance provides an upfront lump sum payment to a business in exchange for a percentage of its future credit card sales. There’s typically no set repayment schedule – the provider collects daily payments until the full amount plus fees is repaid. This flexible structure helps businesses access funds quickly without traditional credit checks or collateral.However, merchant cash advances charge exorbitantly high effective interest rates, often exceeding 100% APR. And shady providers may hide the true costs in the fine print. If sales drop unexpectedly, businesses can fall behind on payments and face severe consequences like account seizures, harassment from collectors, and lawsuits.
-Common Merchant Cash Advance Abuses
While merchant cash advances are legal in Oklahoma, some providers use predatory and even illegal tactics including:
- Misrepresenting repayment terms – Failing to adequately disclose total repayment costs, payment percentages deducted, and repayment duration assumptions.
- Confessions of judgement – Requiring business owners to sign documents admitting default, allowing immediate judgement if payments fall behind.
- Unauthorized withdrawals – Seizing business or personal bank accounts without warning to collect on debts.
- Harassment – Relentless phone calls and threats to pressure owners, contact customers, shut off accounts, or damage credit.
- Lawsuits & judgements – Quick legal judgements based on unfair contract terms and confessions of judgement. Allows seizing assets.
As detailed by the FTC, these tactics let shady merchant cash advance companies trap businesses in debt and ultimately seize control of their finances.
Legal Defenses Against Merchant Cash Advance Abuse
If you feel trapped by an abusive merchant cash advance agreement, consult an attorney immediately to understand your rights and options. There are several potential legal arguments to fight back:
Unconscionability
Contracts with clearly unfair terms that take advantage of one party’s weakness may be ruled unenforceable. The high fees and aggressive collection tactics of many merchant cash advances could qualify.
-Misrepresentation
If a provider deceived you about repayment costs, withheld key information, or included terms different from what was explained verbally, the contract may not be valid.
Unauthorized withdrawals
Seizing funds without notice violates merchant account agreements and consumer protection laws. This could invalidate the merchant cash advance agreement.
Harassment
Aggressive collection practices like threats could violate state and federal debt collection laws. This helps defend against lawsuits.While legal action can be expensive, an attorney can often get abusive merchant cash advance debts waived or settled for a fraction of what is owed. Acting quickly gives you the most leverage.
Alternatives to Merchant Cash Advance Defaults
If legal action seems too costly, these alternatives could help resolve debts before defaulting:
Ask lenders for modifications
Explain your situation and try negotiating extended repayment terms, lower payments, or interest rate reductions. Most lenders would rather get repaid slowly than default.
-Debt consolidation loan
Banks, credit unions, or online lenders may extend loans to pay off the merchant cash advance. This exchanges high-interest debt for something more affordable.
Business loans
If cash flow permits, qualified businesses can get lower-rate loans to pay off merchant cash advances before they spiral out of control.
Shift business focus
Change your revenue model to rely less on credit card sales impacted by daily repayment deductions.
-Business credit cards
Putting some expenses on cards instead of paying cash conserves working capital for merchant cash advance payments.
Sell assets
Selling unused equipment or assets can help catch up if you’ve fallen behind on payments.While less drastic than legal action or closure, these options still require careful financial planning. Speaking with a small business lawyer and accountant can help weigh the pros and cons.
What Happens When You Default on a Merchant Cash Advance?
If efforts to modify, refinance, or pay off your merchant cash advance fail and you default, get ready for serious consequences:
- Account locks & holds – The provider will likely immediately freeze your merchant accounts and bank accounts.
- Harassment from collectors – You’ll face relentless calls and threats demanding repayment. Collectors may also contact customers about debts.
- Damaged business relationships – News of your debts can harm relationships with vendors and customers.
- Lawsuits & judgments – The lender can sue over breach of contract and easily win judgements or liens against your business assets and owners’ personal assets.
- Seizures of assets – With a judgement, the lender can legally seize possessions, equipment, bank accounts, or property to satisfy debts.
- Business closure – Between account suspensions, lawsuits, and asset seizures, defaulting on a merchant cash advance can tank many small businesses, especially those already struggling financially.
Protect Your Oklahoma Business from Merchant Cash Advance Risks
Merchant cash advances promise quick, no-hassle financing but can quickly spiral out of control. Before accepting funds, business owners should:
- Vet providers thoroughly – Review companies, read contracts carefully, consult lawyers. Avoid shady players.
- Budget conservatively – Don’t base repayment plans on best-case sales scenarios that may not pan out.
- Explore alternatives – Shop business loans, credit cards, or other options to find affordable financing rates.
- Use funds strategically – Only use merchant cash advances when the capital drives rapid growth that enables quick payoff.
With the right precautions, merchant cash advances can bridge short-term capital needs. But at the first sign of predatory behavior or unmanageable debts, contact an attorney to defend your business. The legal system can fight back against merchant cash advance abuses.