Philadelphia Merchant Cash Advance Attorney: Your Guide to MCA Litigation
As a small business owner in Philadelphia, you may have turned to merchant cash advances (MCAs) to help your business stay afloat during tough times. But MCA loans can quickly spiral out of control, leaving you facing mounting debt and aggressive collection tactics. If you find yourself on the receiving end of an MCA lawsuit, don’t go it alone – consult an experienced Philadelphia merchant cash advance attorney right away.
In this article, we’ll walk through everything you need to know about merchant cash advance litigation in Philadelphia, and how a knowledgeable lawyer can help protect your business.
-What is a Merchant Cash Advance?
A merchant cash advance provides quick access to capital by allowing a business to borrow against its future credit card sales. The business agrees to pay back the advance, plus a fee, by allowing the MCA company to withdraw a percentage of daily credit card receipts – often 15-35% – until the balance is repaid[1].
Unlike a traditional bank loan, MCAs are not subject to usury laws limiting interest rates. As a result, the equivalent annual percentage rate (APR) on an MCA can top 400%[3]. This makes them an extremely expensive form of financing.
Why MCAs Can Lead to Lawsuits
While MCAs provide fast cash upfront, the burden of daily repayments can quickly become unsustainable. If your business experiences a slowdown, there may not be enough in your merchant account each day to cover the withdrawal – causing you to fall behind.
Once you default, the MCA company can take several aggressive actions to recoup their investment, including:
-- Filing a lawsuit against your business
- Obtaining a confession of judgment
- Freezing your bank accounts
- Placing a lien on your assets
Many MCA agreements require you to waive your right to a trial and allow a confession of judgment if you default. This gives the lender a powerful collections tool, allowing them to seize your assets without even going to court.[3]
Responding to an MCA Lawsuit
If you’ve been served with a merchant cash advance lawsuit, it’s critical to retain legal counsel immediately. An experienced Philadelphia MCA attorney can review your case and build a strategic defense to protect your interests.
Here are some key steps your lawyer may take:
- File a motion to vacate the confession of judgment – If you signed a confession of judgment clause in your MCA contract, your lawyer can argue it is invalid and ask the court to vacate it. Grounds may include it being signed under duress or executed improperly.[3]
- Challenge contract terms – Many MCA agreements contain provisions that may not be enforceable under Philadelphia law, such as excessive fees or interest rates. Your attorney can fight to invalidate unfair or illegal terms.[3]
- Assert affirmative defenses – Your lawyer may argue the MCA company violated lending laws, misled you about terms, or otherwise acted inappropriately. Proving such defenses can defeat their claims against you.[3]
- File counterclaims – If the MCA company harmed your business by freezing accounts or engaging in abusive collection tactics, your lawyer can potentially sue them for damages.[3]
- Negotiate a settlement – Often the best outcome is a negotiated settlement that reduces the amount owed and sets an affordable repayment schedule. An experienced attorney can get you the best deal.[3]
With an attorney fighting on your behalf, you have a much better chance of reaching a favorable result, avoiding asset seizure, and protecting your business.
Alternatives to Litigation
In some cases, proactive legal intervention can resolve MCA issues without needing to go to court. Your attorney may be able to:
-- Negotiate modified repayment terms
- Work out a lump sum settlement for less than you owe
- Get certain contracts voided altogether
- Stop collections activities against you
Taking action early not only helps minimize legal expenses, but prevents further damage to your business.
Choosing a Qualified Merchant Cash Advance Attorney
Don’t leave your company’s fate in the hands of just any lawyer. Look for an attorney with specific experience fighting merchant cash advance lawsuits and collections. Key credentials include:
- In-depth knowledge of MCA lending practices
- Understanding of MCA contract loopholes
- Record of favorable settlements and judgments
- Litigation experience in Philadelphia courts
- Membership in relevant legal associations
Be sure to ask about the lawyer’s track record with similar cases. You want someone who knows how to effectively dispute improper MCA tactics in Philadelphia courts.
-Act Now to Protect Your Business
If you’ve been sued for defaulting on a merchant cash advance, don’t delay in seeking legal representation. A knowledgeable Philadelphia MCA attorney can often get lawsuits dismissed, debts reduced or eliminated, and save your business from financial ruin.
Don’t go it alone against aggressive MCA collectors. Call an experienced merchant cash advance litigation lawyer today to discuss your best options.