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Louisiana 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, there’s always something that needs your attention. And when cash flow gets tight, it can feel impossible to keep all the plates spinning. That’s why many business owners turn to merchant cash advances to get quick cash injections when they need it most.But merchant cash advances (MCAs) come with their own set of problems. The terms are often predatory, with sky-high interest rates and daily repayment requirements that can cripple a business’s finances. And shady MCA brokers prey on desperate business owners, saddling them with debt they may never escape.Luckily, there are consumer protection laws and bankruptcy options in Louisiana that can help business owners find relief from predatory MCA loans. This article will cover:
-- How merchant cash advances work
- Louisiana laws regulating MCAs
- Using bankruptcy to eliminate MCA debt
- Finding reputable MCA lawyers in Louisiana
How Do Merchant Cash Advances Work?
A merchant cash advance is a form of business financing where an MCA company gives you an upfront lump sum of cash in exchange for a percentage of your future credit card and debit card sales.Unlike a small business loan, MCAs don’t come with fixed monthly payments. Instead, the MCA company takes a set percentage of your daily credit card receipts – usually between 10-20% – until the advance has been repaid in full plus fees and interest.This repayment structure allows you quick access to capital without having to qualify based on your business or personal credit scores. But it also means you have no control over the total cost of the financing. MCA companies can take thousands more than the original cash advance if your sales decline.
Louisiana Laws Regulating Merchant Cash Advances
While the MCA industry insists its products are “purchases” rather than loans, Louisiana lawmakers have started recognizing these transactions for what they really are – ultra high-cost financing that demands more oversight.
Usury Limits on Loans
Louisiana statutes impose usury limits on consumer loans, capping interest rates at 12% per year. However, MCA companies have historically claimed exemption from these laws by calling themselves “cash advance purchases” rather than lenders.But a 2016 state appeals court ruling shattered this fiction. The judges found that an MCA contract that took $42,000 in payments to satisfy a $20,000 advance was actually an illegal usurious loan under state law.Relying on this precedent, Louisiana small businesses can now challenge predatory MCA deals with usury limit defenses.
New Disclosure Rules
In 2018, Louisiana also passed a law requiring enhanced disclosures for MCA contracts over $1,000. MCA companies must now provide:
-- Total cost of financing as an annual percentage rate
- Payment amount and frequency
- Total repayment amount
While this law stops short of capping rates like usury statutes, it at least forces MCA companies to clearly disclose their obscenely high costs. Transparency makes it harder for them to trap unwitting business owners.
Using Bankruptcy to Eliminate MCA Debt
If an MCA has already buried your business finances, bankruptcy may be the lifeline you need. Filing for Chapter 7 or Chapter 11 can eliminate the legally enforceable obligation to keep paying back an MCA.Without bankruptcy, MCA contracts allow companies to raid your checking account and credit card receipts indefinitely. But upon filing, the “automatic stay” pauses all collection activities and clears unsecured debts.This gives struggling yet viable Louisiana businesses a fresh start – unburdened from MCA repayments they can’t afford.
Finding Reputable MCA Lawyers in Louisiana
Don’t go up against predatory MCA companies without experienced legal counsel in your corner. Louisiana merchant cash advance lawyers can help you:
- Negotiate Settlements: MCA companies often accept steep discounts on what they’re owed rather than risk nonpayment through bankruptcy. Skilled attorneys negotiate the best possible settlement.
- Assert Usury Claims: As discussed above, Louisiana MCA deals can potentially be invalidated if their rates exceed usury limits. Use this as leverage in settlement talks.
- File Bankruptcy: Experienced bankruptcy lawyers handle the entire process, increasing your chances of a clean slate.
- Defend Against Lawsuits: If an MCA company sues to garnish your bank accounts, your lawyer fights to protect your assets.
When vetting merchant cash advance lawyers in Louisiana, opt for ones with specific experience dealing with MCA companies. Since MCAs occupy a legal gray area between purchases and loans, you want counsel well-versed in this niche.Also prioritize lawyers who offer free case reviews. Reputable firms confidently assess the strength of your claims at no upfront cost.
The Bottom Line
Predatory merchant cash advances sink far too many viable Louisiana small businesses. But with smart legal representation asserting your rights under state consumer laws, you can escape the endless debt trap. Partnering with the right Louisiana MCA lawyer paves the way to a reasonable settlement, bankruptcy discharge, or lawsuit victory against your MCA creditor.So don’t despair or ignore aggressive collections calls if an MCA has consumed your finances. Take back control with the help of an experienced bankruptcy or debt relief attorney. Within weeks, you can have a plan to eliminate your MCA burden and resume normal operations.
-IF YOU’RE LOOKING FOR A BUSINESS DEBT SETTLEMENT COMPANY, VISIT DELANCEY STREET. CLICK HERE NOW.