Iowa Merchant Cash Advance Attorney – Your Guide to MCA Loans and Legal Help
Hey there! If you’re a small business owner in Iowa who’s gotten yourself into some trouble with merchant cash advances (MCAs), you’ve come to the right place. I’m here to give you the lowdown on MCA loans, your legal options, and how an Iowa merchant cash advance attorney can help you out of a sticky situation.Let’s start with the basics – what is a merchant cash advance loan anyway? Well, it’s a form of business financing where a company gives you an upfront lump sum of cash in exchange for a percentage of your future credit card and debit card sales. The amount they take varies, but it’s often around 10-20% of your daily credit card receipts.These loans became popular after the 2008 recession when banks tightened up lending. For a while they seemed great – easy to qualify for and you got money fast. But for many businesses, the high repayment rates make them impossible to pay back. It‘s not uncommon to end up paying 2-3x the amount you borrowed over the course of the loan!The companies that offer MCAs make them sound almost too good to be true. But let me tell you, if it sounds too good to be true, it probably is! Here are some red flags to watch out for with merchant cash advances:
- Crazy high interest rates – we’re talking 200-500% APR in some cases!
- Requires access to your bank account so they can withdraw daily payments
- No clear payoff date – the loan can drag on indefinitely
- Requires a personal guarantee from the business owner
See what I mean about things being too good to be true? Unfortunately, many businesses don’t realize how damaging MCAs can be until it’s too late.
-How Merchant Cash Advances Lead to Legal Trouble
So how exactly do these merchant cash advance loans lead to legal troubles? There are a few common scenarios:
- The payments become unmanageable – Those daily withdrawals take a huge bite out of your cash flow. For many businesses, it reaches a point where you simply don’t have the money to cover the payments. This can lead to missed payments, bounced checks, bank fees, and eventually defaulting on the MCA.
- The MCA company sues you – When you default, the first thing many MCA lenders will do is slap you with a lawsuit. They may try to seize your assets or get a court judgment against you.
- You close your bank account – Some businesses try to cut off the MCA company’s access to their bank account. But this is often a violation of the loan terms and can also prompt legal action.
- You file for bankruptcy – For some businesses, filing Chapter 7 or Chapter 11 bankruptcy feels like the only way out. But MCA loans often aren’t dischargeable in bankruptcy, so this can be a costly dead end.
- The MCA company pressures you to take more loans – Shady lenders will offer you another lump sum to help cover payments on your existing MCA. But this just digs you deeper into debt.
As you can see, merchant cash advances can create a downward spiral that leads business owners into a legal and financial mess. But don‘t worry – there are ways to fight back!
How An Iowa MCA Attorney Can Help
If you‘re struggling with an unpayable merchant cash advance in Iowa, contacting an attorney experienced with these loans is a smart first move. Here are some ways a qualified lawyer can help:
- Review your MCA agreement – An attorney will review your original loan contract and look for any provisions that may be unlawful under Iowa law. There may be grounds to get the agreement invalidated or the loan terms changed.
- Stop collections activity – As soon as you retain counsel, your lawyer can contact the MCA company and demand they cease all collection efforts until the dispute is resolved. This prevents further damage to your business.
- Defend against a lawsuit – If you’ve already been sued, an experienced attorney can handle the litigation. They may be able to get the case dismissed or delay legal proceedings.
- Negotiate a settlement – In many cases, an Iowa MCA lawyer can negotiate a lump-sum settlement that’s much less than the full balance. This can save you a ton of money.
- Explore bankruptcy options – If bankruptcy is on the table, a lawyer can advise you on whether it’s the right move and maximize the chance your MCA debt gets discharged.
- Argue the loan is unlawful – Some MCA loans violate state laws around usury, lending practices, interest rates, etc. A skilled lawyer will identify any violations and use them as leverage in getting the terms changed in your favor.
- Protect your personal assets – MCA lenders often go after personal assets or accounts owned by the business owner. Your attorney will put up legal barriers to safeguard your personal finances.
The key is acting quickly and having an experienced Iowa MCA attorney review your situation right away. Many laws and options are time-sensitive, so you don’t want to let things drag on if you can avoid it.
-Know Your Rights Under Iowa Law
Now, I‘m not an attorney myself so I can‘t give you official legal advice here. But I want to give you a quick overview of some Iowa laws and rights that may apply to your merchant cash advance loan:
- Usury laws – Iowa has laws capping interest rates on loans at 21% APR. MCA loans often far exceed this, so there may be grounds to lower the rates substantially.
- Lending license required – In Iowa, making commercial loans over $35,000 requires a lending license. If your MCA lender doesn’t have a license, the loan contract may not be enforceable.
- Unfair/deceptive practices prohibited – Tricks like hiding fees, harassing borrowers, or forcing more loans could violate Iowa’s laws against unfair business practices. This can nullify parts of the agreement.
- Confessions of judgment – MCA contracts often have these clauses where you waive the right to defend yourself if sued. But in Iowa these aren’t enforceable, so don’t let them intimidate you!
- Right to request validation of debt – If an MCA company sells off your loan to a collection agency, you have the right to request they validate the amount owed. This can delay or derail collections.