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Pennsylvania Merchant Cash Advance Attorney – Your Guide to MCA Debt Relief

Merchant cash advances, also known as MCAs, have become an increasingly popular form of alternative business financing in Pennsylvania and across the US. Unlike traditional bank loans, MCAs provide fast access to capital without requiring strong credit or lengthy applications.But MCAs come with major downsides. They charge very high fees and interest rates, and require daily or weekly repayments that can overwhelm cash flow. Many Pennsylvania business owners have found themselves trapped in a vicious cycle of MCA debt.If you took out one or more merchant cash advances that are now causing financial and legal headaches, you may be wondering: should I hire a Pennsylvania MCA attorney?This guide will explain:

  • What is a merchant cash advance?
  • The pros and cons of MCAs
  • Common legal issues caused by MCA debt
  • Whether you need an attorney
  • What can an MCA lawyer do to help?
  • Questions to ask before hiring an MCA attorney

What is a Merchant Cash Advance?

A merchant cash advance (MCA) provides a lump sum of capital to a business in exchange for a percentage of its future credit card and/or debit card sales.It is not technically a loan, but rather the purchase of future receivables at a discount. This allows MCA companies to charge higher fees and interest rates than banks since they are not subject to state usury laws.Here’s a quick rundown of how merchant cash advances work:

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  • A business applies for an MCA, usually online or through a broker
  • The MCA provider reviews bank statements and offers a lump sum advance
  • The business receives the cash (often within 24-48 hours)
  • The MCA takes a fixed percentage of daily or weekly credit card sales until paid off
  • There is no set repayment schedule. The business pays each day/week until the full amount plus fees is repaid.

This quick access to cash is appealing. But the costs add up fast.

The Pros and Cons of Merchant Cash Advances

Pros

  • Fast approval and funding
  • No credit check required
  • Simple application process
  • No collateral required
  • Fixed daily/weekly payments

Cons

  • Very high fees and interest rates
  • Payments take large % of credit card sales
  • No flexibility in repayment structure
  • Can quickly create cash flow issues
  • Tough to pay off balance

Unlike a term loan, there is no set end date with an MCA. You pay a percentage of sales every day or week until the full balance plus fees is repaid.For businesses with inconsistent cash flow, this repayment structure can be difficult to manage. And the high fees mean you end up paying back far more than the amount advanced.

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Common Legal Issues Caused by MCA Debt

Merchant cash advances are largely unregulated. This has led many predatory MCA providers to engage in abusive, deceptive practices.Some common legal issues faced by Pennsylvania business owners with MCA debt include:

  • Excessive interest rates – MCAs often charge the equivalent of 60-200%+ APR interest when fees are calculated.
  • Misleading statements – Brokers and providers sometimes lie or omit key info about costs.
  • Harassment from debt collectors – Aggressive collection calls and tactics are common.
  • Lawsuits and judgments – MCA companies frequently sue for nonpayment.
  • Wage and bank account garnishment – Your accounts can be frozen and wages garnished if sued.
  • UCC liens – A UCC gives them rights to your assets and receivables.
  • Personal guarantees – Owners often personally guarantee MCAs.
  • Bankruptcy complications – MCA debt makes filing more complex.
  • Going out of business – The weight of MCA payments can sink a company.

Facing legal action can be intimidating. But an experienced Pennsylvania MCA attorney can help protect your rights.

Do You Need a Merchant Cash Advance Attorney?

If you‘re facing any legal issues related to MCA debt, partnering with a lawyer is highly recommended. An attorney who specializes in this area can provide services such as:

  • Reviewing your MCA contracts and advising if you have any defenses
  • Communicating with MCA providers and collectors on your behalf
  • Negotiating settlements or restructured payment plans
  • Defending you if sued and avoiding judgments
  • Challenging any improper or abusive collection practices
  • Resolving UCC lien issues
  • Advising on bankruptcy if needed

Handling MCA legal matters requires expertise. An attorney has the knowledge and resources to deal with your debt and protect your business interests.

What Can a Merchant Cash Advance Attorney Do?

Some of the key ways a qualified MCA lawyer can help:

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Review Your Contracts and Accounts

  • Analyze your MCA agreements to identify any unlawful terms or deceptive practices.
  • Audit your accounts to verify the correct balance and payments made.
  • Determine if you have any defenses against legal action.

Handle Communications

  • Take over all calls and correspondence with MCA companies and collectors.
  • Send cease and desist letters if you are being harassed.

Negotiate Favorable Terms

  • Work to get your payments and balances reduced.
  • Restructure the MCAs to be more affordable.
  • Get accounts frozen due to disputes released.

Resolve Lawsuits

  • Defend you in court if sued over nonpayment.
  • Fight to get unfair judgments vacated.
  • Protect your business assets and bank accounts.

Deal with Bankruptcy

  • Advise if bankruptcy may be your best option.
  • Represent you through the bankruptcy process if needed.

Address UCC Liens

  • Challenge any improper UCC liens placed on your business.
  • Get unlawful or excessive liens removed.

File Counterclaims

  • Sue for damages if the MCA engaged in unlawful conduct.
  • Seek to get your contracts rescinded or reformed.

Having an experienced lawyer on your side levels the playing field and gives you leverage when dealing with predatory MCA companies.

Questions to Ask Before Hiring a Merchant Cash Advance Attorney

Finding the right lawyer to address your MCA issues is crucial. Here are some key questions to ask:

  • Do you specialize in MCA debt cases? Look for an attorney focused specifically on this area.
  • How many years have you handled MCA debt relief? Choose someone with extensive experience.
  • What are your credentials? Confirm they are licensed and in good standing.
  • What is your success rate? Ask for case results and client reviews.
  • What is your fee structure? Get clear rates and payment options.
  • What can I expect if I hire you? Get details on their process and timeline.
  • Can you provide references? Speaking to past clients can give insight.
  • Are you willing to litigate if needed? Ensure they can take cases to court.
  • Can you help with bankruptcy if needed? Check if they handle MCA bankruptcy cases.

Vet any lawyer thoroughly before hiring them. Make sure they have the proper expertise and track record to handle your specific situation.

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