Charlotte Merchant Cash Advance Legal Help – Attorneys Provide Debt Settlement Services
Merchant cash advances can be a helpful source of funding for small businesses in Charlotte, but they also come with legal risks. If your business has fallen behind on payments or gotten into legal trouble over a merchant cash advance agreement, you may need the help of an attorney to negotiate a settlement or defend your rights. This article provides an overview of merchant cash advance legal issues in Charlotte and discusses how business attorneys can assist with debt settlement.
How Merchant Cash Advances Work
Before getting into the legal issues, let’s review how merchant cash advances (MCAs) work. An MCA provider gives a business an upfront lump sum payment in exchange for a percentage of future credit card sales over a fixed period – usually 4-12 months. The MCA provider collects daily or weekly payments automatically as a percentage of daily credit card receipts.The advantages are quick funding without collateral, but the downside is the cost. MCA rates often equate to 50-200% APR when calculated as an interest rate. Businesses can easily get overextended if sales drop.
-Common Legal Issues with Merchant Cash Advances
Merchant cash advances seem simple at first, but several key legal issues frequently arise:
Falling Behind on Payments
It’s easy to fall behind if business slows. MCA contracts often have expensive default rates up to 3-4X the base rate. Missed payments can quickly spiral out of control.
Disputes Over Actual Payment Amounts
MCA providers can make errors calculating the daily payments, taking out too much. It’s hard for merchants to verify if they don’t closely audit the payments.
Allegations of Fraud
MCA providers may accuse a merchant of fraud if they suspect the business is diverting card transactions to avoid payments. But fraud allegations can be difficult to prove.
-Confessions of Judgement
Many MCA contracts contain confessions of judgement allowing the MCA company to obtain a judgement without notice. This can freeze bank accounts.
Lack of Understanding
Business owners often don’t fully understand the MCA contract terms and high effective interest rates until issues arise. This can lead them to sign contracts they later regret.
Working With a Business Attorney
With various legal and financial risks, having a business attorney review your merchant cash advance agreement upfront and represent your interests can be extremely helpful. Attorneys can assist with:
Contract Review
Reviewing the MCA contract to clarify the terms, rates, risks, and your responsibilities before signing.
Document Review
If you believe your MCA provider has made errors calculating daily payments, an attorney can audit the statements and payment records to verify.
-Settlement Negotiations
If your business defaults or gets hit with excessive fees, an attorney can negotiate a settlement. Many MCA providers will negotiate discounts rather than pursuing lengthy legal action.
Defense Against Fraud Allegations
If faced with accusations of fraud or illegal credit card processing, a lawyer can defend your business against unsubstantiated claims and make sure you get fair treatment.
Emergency Court Orders
If an MCA company freezes your bank accounts without cause, an attorney can quickly file emergency court orders to regain access to your funds.
-Debt Relief Options
If unable to reach a settlement and facing potential judgements, a business bankruptcy filing may be an option to discharge the debt. An attorney can advise if bankruptcy is appropriate.
Charlotte Merchant Cash Advance Attorneys
The following Charlotte business attorneys have experience assisting clients with legal issues related to merchant cash advances:
Marks & Associates, PLLC
Marks & Associates focuses on small business disputes and financial transactions. Their attorneys are familiar with MCA agreements and can assist with contract review, payment audits, negotiations, and litigation defense.
James, McElroy & Diehl, P.A.
The financial attorneys at James, McElroy & Diehl regularly handle cases involving business financing disputes. They can provide counsel on MCA contracts, negotiate settlements with lenders, and assist with debt relief options.
Henderson Law, PLLC
Led by an experienced commercial litigator, Henderson Law helps small businesses resolve disputes with lenders and creditors. They are prepared to take on court battles with MCA providers over breach of contract, fraud accusations or blocked payments.
Key Takeaways
- Merchant cash advances provide fast financing but risk legal troubles if sales drop.
- Falling behind on payments, disputes over amounts, allegations of fraud & frozen accounts are common issues.
- An attorney can help review the MCA contract upfront, audit payment records, negotiate settlements, defend against unsubstantiated claims, regain access to frozen accounts, and advise on debt relief options.
- Reputable Charlotte small business attorneys are available to provide legal counsel on merchant cash advances.
While merchant cash advances can benefit companies in the short-term, it pays to have legal guidance to avoid pitfalls. Connecting with an attorney experienced in financial transactions can help Charlotte businesses safely leverage merchant funding.