Illinois Merchant Cash Advance Lawyers and Business Debt Relief
Running a small business is tough. Between managing employees, keeping customers happy, and trying to turn a profit, things can get overwhelming fast. And when cash flow starts running dry, it’s easy to panic.Many business owners in this situation turn to merchant cash advances to keep things afloat. But these financial products come with their own set of problems. Excessive fees, sky-high interest rates, and aggressive collection tactics are par for the course.If you took out a merchant cash advance in Illinois and are now facing legal threats from the funder, don’t go it alone. Read on to learn how an experienced business debt relief lawyer can help.
How Merchant Cash Advances Work
Unlike a small business loan from a bank, a merchant cash advance (MCA) is actually the purchase of a business’s future credit card sales at a discount. Here’s a quick rundown of how it works:
-- A funding company gives the business owner an upfront lump sum of cash
- In exchange, the business agrees to pay back the funder by allowing them to withdraw a set percentage of daily credit card sales until the balance is repaid (plus fees/interest)
- There is no set repayment schedule – the funding company collects payments automatically from credit card settlements
This quick access to capital can be a lifeline for struggling companies. But the costs can spiral out of control if sales take a dip.
The Ugly Side of Merchant Cash Advances
While merchant cash advances provide fast money, they come at a steep price. Here are some of the common issues business owners face:Exorbitantly high interest rates – MCAs typically charge the equivalent of 60-200% APR or more in fees.Daily debits from bank account – The funder has direct access to withdraw payments from sales, which puts cash flow at risk.No concrete payoff date – Since payments depend on credit card sales, struggling businesses can end up paying far more than the advance.Aggressive collections – When the business can’t keep up with payments, funders often sue, garnish bank accounts, or send accounts to debt collectors.Many small business owners don’t fully understand the risk and get trapped in predatory MCA deals. If this happened to your company, you need an attorney on your side.
Fighting Back Against Merchant Cash Advance Abuse
The good news is that many of the abusive tactics funders use violate state and federal law. An experienced lawyer can help you:
- Negotiate a settlement for a fraction of the balance
- Craft defenses to defeat lawsuits or collection efforts
- Attack the MCA agreement as predatory lending
- Recover damages for violations of lending rules
Don’t wait until you get a court summons or collectors start calling. Reach out to an Illinois business debt relief attorney as soon as possible after signing an MCA agreement. The sooner you act, the more leverage you’ll have.
-4 Defenses Against Merchant Cash Advance Lawsuits
If legal action has already been filed, all hope isn’t lost. Here are some of the most powerful defenses lawyers use:
1. Violations of Illinois Lending Laws
In Illinois, merchant cash advances fall under the state’s Payday Loan Reform Act and Consumer Installment Loan Act. If the funder fails to follow strict rules on lending limits, disclosures, etc. the agreement may be void.
2. Unconscionable Contract Terms
If the fees, rates, or repayment terms are outrageously unfair, courts can refuse to enforce the agreement. The business may still have to return the upfront cash, but won’t owe any interest or penalties.
3. Fraud and Misrepresentation
When funders mislead the business about costs, consequences for late payments, or other key terms, it can amount to fraud. This can invalidate the entire agreement.
4. Usury Violations
Usury laws cap the maximum allowable interest rates lenders can charge. MCA companies often exceed rate caps which courts frown on.
-Turning the Tables in MCA Lawsuits
Rather than just defending against collection lawsuits, some businesses go on the attack with counterclaims against the funder for:
- Predatory lending
- Fraud
- Usury violations
- Racketeering
- Breach of contract
This aggressive offense can force the MCA company to settle the debt for pennies on the dollar.
Finding the Right Illinois Business Debt Relief Lawyer
As you can see, merchant cash advance lawsuits are complex. Don’t waste money on a random law firm that dabbles in commercial litigation. Look for attorneys with specific experience fighting MCA lenders, such as:
-- Avvo.com – Search for 5-star rated lawyers near you
- LawInfo.com – Pre-screened local attorneys
- FindLaw.com – Detailed lawyer profiles
Reach out to several top-rated MCA lawyers for free case evaluations. Many work on a contingency fee basis, so they only get paid if you win or settle the case.
Other Business Debt Relief Options
If you can no longer afford merchant cash advance payments, bankruptcy or debt settlement may be smart alternatives:Business Bankruptcy – Filing Chapter 7 or Chapter 11 stops collections and wipes out debt. Just beware that it also tanks your business credit.Debt Settlement – Debt relief companies negotiate lump-sum settlements with creditors for 30-50% off what you owe. This avoids court but hits your credit report.Talk to a small business debt relief attorney to explore all options. Acting quickly gives you maximum leverage against aggressive MCA collectors.
Don’t Face Cash Advance Lenders Alone
Getting sued or harassed by merchant cash advance companies is stressful enough without going it alone. The experienced business debt relief lawyers at Delancey Street have the knowledge and resources to fight back against predatory lending.We custom-tailor robust legal defenses to fit your situation. Our zealous advocacy has helped countless companies invalidate unfair MCA agreements and defeat abusive collection tactics.Don’t wait until it’s too late or the damage is already done. Schedule your free case review today – we’re always just a phone call away.