Houston Merchant Cash Advance Legal Help – Attorneys for Debt Settlement
Merchant cash advances (MCAs) have become an increasingly popular form of alternative financing for small businesses in recent years. However, some MCA providers engage in predatory and even illegal practices that can leave business owners in difficult financial situations. If you are a Houston business owner who has been victimized by an unscrupulous MCA company, there are legal options available to help you get out of debt and regain control of your finances.
The Trouble with Merchant Cash Advances
A merchant cash advance essentially functions as a short-term loan, with the MCA provider giving the business owner an upfront sum of cash in exchange for a percentage of future credit card and debit card sales over a set period of time. This can seem like an attractive option for businesses that don’t qualify for traditional loans from banks.The problem arises when the MCA contract contains hidden fees, exorbitant interest rates, and other predatory terms that make it extremely difficult for the borrower to pay back the advance. For example, some MCA companies will structure payments as a percentage of total sales, rather than credit card sales specifically. This allows them to take more money than originally agreed upon.Shady MCA providers also often use aggressive, intimidating collection tactics to squeeze money out of struggling business owners. They may continue auto-debiting set amounts from the borrower’s bank account even when the business is failing and unable to support those payments.
-Legal Recourse for Victims
If you feel an MCA company has taken advantage of you, there are a few legal avenues to pursue in order to escape crippling debt:
Breach of Contract Lawsuit
You may have grounds to sue your MCA provider for breach of contract if they failed to honor the original terms and conditions of your agreement. For example, if they began debiting more money from your account than stipulated in the contract without your consent, that likely constitutes a breach.An experienced business litigation attorney can review your MCA contract to identify potential breaches and build a case against the provider. If successful, you may be awarded monetary damages.
Usury Claim
-Usury laws prohibit charging excessive interest rates on loans. Each state has its own thresholds for what constitutes criminal usury. In Texas, any interest rate over 10% is subject to civil usury penalties.If your MCA contract stipulated an annual percentage rate (APR) higher than the usury cap in your state, you may have a usury claim against the provider. This would allow the court to void the entire debt or at least reduce the amount owed to comply with usury limits.
Deceptive Trade Practices Act Lawsuit
Texas and most other states have consumer protection laws banning deceptive business practices. Common violations by MCA companies include:
- Misrepresenting or hiding the true costs of the cash advance
- Failing to adequately disclose key terms and conditions
- Using intimidation tactics to collect payments
You can sue an MCA provider under your state’s deceptive trade practices act. If successful, possible remedies include voiding the contract, monetary damages, and injunctions barring them from continuing unlawful practices.
Debt Settlement
-If you wish to avoid legal action, another option is trying to negotiate a debt settlement directly with your MCA provider. Offer to pay a lump-sum that is less than the full amount owed in exchange for the company releasing its claim against you and your business.Having an experienced debt settlement lawyer assist with these negotiations will give you more leverage and increase your chances of success. They understand the intricacies of MCA contracts and can identify potential weaknesses in the provider’s case that translate into bargaining power for you.
Connect with a Houston MCA Attorney
Navigating MCA debt disputes and lawsuits can be extremely complex and stressful without knowledgeable legal guidance. The attorneys at Delancey Street have extensive experience representing Texas business owners in cases against predatory merchant cash advance companies.We will thoroughly analyze your situation, advise you on the best course of action, and vigorously represent your interests every step of the way. Reach out for a free consultation to learn more about how we can help you escape crippling MCA debt and get back on the path to financial stability.