Boston Merchant Cash Advance Attorney
Getting a merchant cash advance can seem like a quick fix for businesses needing capital. But these advances come with big risks. If your Boston business took a merchant cash advance (MCA) and is struggling with payments, you need help. This article explains how a Boston MCA attorney can get you relief.We’ll cover:
- How merchant cash advances work
- Predatory lending tactics in Massachusetts
- Your options if you default on an MCA
- Settlement negotiation strategies
- Defenses against MCA lawsuits
- When bankruptcy makes sense
How Do Merchant Cash Advances Work?
Merchant cash advances provide fast money to businesses by buying a portion of their future credit card sales. Here’s how it works:
-- You get a lump sum payment upfront
- The MCA company takes a fixed percent of your daily credit card revenues
- You make payments until the balance is repaid (usually 6-18 months)
- There is no set repayment schedule – payments vary based on sales volume
This flexibility seems attractive at first. But when sales drop, your payments stay the same. This causes many Boston businesses to fall behind.MCAs also charge very high rates, ranging from 30% to 300% APR when annualized. And they pile on large origination fees.You can end up owing double or triple the amount advanced. This leads many merchants into a debt spiral.
Massachusetts Merchant Cash Advances – Predatory Tactics
The MCA industry is largely unregulated in Massachusetts. This allows predatory tactics like:
- Deceptive language – calling it a “purchase agreement” not a loan
- Rates exceeding 100%, even 300% APR
- Charging origination fees of 10% or more upfront
- Requiring daily repayments regardless of sales
- Confessions of judgement – waiving your legal rights
Lenders also use aggressive collection methods when you default:
- Harassing phone calls
- Freezing merchant processing accounts
- Threatening or filing lawsuits
- Trying to garnish business bank accounts
According to one survey, 75% of Massachusetts MCA recipients regretted taking the advance. If you took an MCA in Boston and are underwater, don’t go it alone. Hire an attorney.
-What Happens If You Default on a Boston MCA?
Defaulting occurs when you miss scheduled payments to the lender. Many MCA agreements consider it default if you:
- Miss a single daily payment
- Have a certain percentage drop in credit card sales
- Close your merchant processing account
When you default, the remaining balance often becomes due immediately. The MCA company will start collection efforts to recover what you owe.This may involve:
- Demand letters threatening to sue you or report the default
- Freezing your merchant accounts so you can’t process cards
- Trying to garnish your business bank accounts
- Filing a lawsuit for breach of contract
If sued, they will try to get a judgement against you for the full amount owed plus their legal fees.
How a Boston MCA Attorney Can Help
If you defaulted or are struggling with MCA payments, an attorney can provide relief. An experienced lawyer will:
- Negotiate Settlements: Work to settle your debt for less than you owe. Many MCA lenders will make deals to avoid litigation.
- Defend Lawsuits: If sued, assert legal defenses to have the case dismissed or judgement avoided.
- Reduce Payments: Negotiate lower daily payments based on your current sales volumes.
- Restructure the Agreement: Try to convert the MCA to fixed monthly payments rather than variable daily payments.
- Discharge in Bankruptcy: File Chapter 7 or 13 bankruptcy to eliminate part or all of the debt.
Having an attorney levels the playing field when negotiating with MCA companies. It shows you are willing to fight for your rights under Massachusetts law.
-Settlement Negotiation Strategies in Boston
Your attorney will first try to settle your MCA debt through negotiation. This avoids risky and costly litigation for both sides.Possible negotiation tactics include:
- Offering a lump sum payment for less than the balance owed
- Proposing a reduced payoff amount as full satisfaction
- Asking for lower daily payments based on current sales
- Trying to convert the agreement to fixed monthly payments
- Threatening legal action if they won’t negotiate reasonably
The MCA company has incentive to make a deal. Going to court is expensive, and they risk getting nothing if you win.An experienced attorney knows how to bring them to the table. Many cases settle for 40% to 60% less than the merchant owes.
Massachusetts MCA Defenses Against Lawsuits
If the MCA company won’t settle, they may file a lawsuit over the debt. Your Boston attorney can defend against it using arguments like:
-- The agreement violates Massachusetts lending laws
- The rates and fees exceed legal limits
- The lender failed to register properly with the state
- Unconscionable contract terms
- Fraud, misrepresentation, or nondisclosure
- Breach of contract by the MCA company
If successful, these defenses can invalidate the agreement. The case could be dismissed entirely.Your lawyer will craft the strongest defense based on issues found in your specific contract. The goal is to void the MCA agreement or avoid judgement.
Should You File Bankruptcy for MCA Debt?
If you have multiple debts you can’t pay, bankruptcy may help discharge your merchant cash advance balance.Under Chapter 7 bankruptcy, qualifying business debts can be wiped out entirely. Chapter 13 allows you to repay a portion over 3-5 years.Bankruptcy stops collections and lawsuits in their tracks. The automatic stay gives you breathing room while debts are restructured or eliminated.Your attorney will advise if bankruptcy makes sense based on your assets, debts, and income. It provides a fresh start for Massachusetts small businesses suffocating under MCA loans.
Act Fast to Protect Your Rights
If you’re behind on a Boston area merchant cash advance, take action now. The sooner you consult an attorney, the better your chances of negotiating a favorable settlement.Don’t wait until you are sued and a judgment is entered against you. This severely limits your options. An experienced MCA lawyer can provide immediate relief and defend your rights under Massachusetts law.