Kentucky Merchant Cash Advance Legal Help – Attorneys, Debt Settlement
Merchant cash advances have become a popular way for small businesses in Kentucky to access quick financing. However, some merchants have found themselves struggling to repay their advances due to high repayment rates and fees. If you’re a Kentucky business owner facing legal issues with your merchant cash advance, this guide can help.
Understanding Merchant Cash Advances in Kentucky
A merchant cash advance (MCA) is a form of business financing where a company purchases a portion of your future credit card sales in exchange for an upfront lump sum payment. The amount advanced is generally based on your average monthly credit card volume.Unlike a small business loan, merchant cash advances aren’t considered a “loan” under Kentucky state law. This means MCA companies can bypass state lending regulations on interest rates and fees. However, the Kentucky Office of Financial Institutions still regulates MCA companies operating in the state.While merchant cash advances offer quick access to funds, they often come with high repayment rates deducted daily from your credit card settlements. This can make it difficult to repay the advance and still have enough working capital to run your business.If you find yourself unable to keep up with your daily repayments, don’t panic. You have options under Kentucky law and may be able to negotiate a settlement on what you owe.
-Kentucky Debt Collection Laws for Merchant Cash Advances
Although merchant cash advances aren’t considered “loans,” the companies providing them are still subject to Kentucky’s debt collection laws under KRS Chapter 380.This means they must abide by rules prohibiting harassment, false statements, unfair practices, and threats when attempting to collect payments owed. Some prohibited practices include:
- Calling before 8 AM or after 9 PM
- Threatening arrest or legal action that isn’t permitted
- Contacting your place of employment
- Using obscene language
- Publishing lists of debtors
If an MCA company engages in any illegal collection tactics, you have the right to sue them for damages under KRS 380.990. An attorney can help you identify any violations and represent you in court.
Seeking Legal Help for Merchant Cash Advance Issues
If you’re struggling to repay your merchant cash advance or facing aggressive collection attempts, speaking with a lawyer can help protect your rights. An attorney experienced with MCA agreements may be able to:
- Negotiate a settlement – They can leverage Kentucky debt collection laws to negotiate a lump-sum payoff amount that’s less than what you owe. This can relieve the pressure of high daily repayment rates.
- Identify abusive practices – Your lawyer can review all communication and tactics used by the MCA provider to build a case for illegal debt collection.
- Defend you in court – If sued over the debt, an attorney can put together defenses regarding excessive fees, improper documentation, or confusing terms in the original agreement.
The following are examples of reputable legal sites you can use to find an attorney in Kentucky:
-- Avvo – Marketplace matching clients with lawyers based on experience and fees.
- LawInfo – Allows you to search for attorneys by location and practice area.
- FindLaw – Directory of lawyers searchable by state, city, and legal issue.
When researching attorneys, look for ones experienced in commercial litigation, financial services law, and debt settlement. Be sure to ask about their specific experience negotiating merchant cash advance agreements.
4 Defenses Against Merchant Cash Advance Lawsuits
If an MCA company sues you over unpaid balances or fees, an attorney may be able to assert defenses to have the case dismissed or damages reduced. Here are some of the most common defenses:
1. Unconscionability
Argues the terms of the agreement were so unjust or one-sided that no reasonable person would agree to them. This can include excessive fees, extremely high repayment rates, or confusing legalese.
2. Breach of Contract
Claims the MCA company didn’t uphold their end of the agreement. For example, not providing the agreed upon lump-sum payment or illegally accessing sales data beyond what was contracted.
3. Fraudulent Inducement
Alleges the MCA company made false statements or misrepresented terms to convince you to sign. This could include lying about repayment rates, fees, or failure to disclose key information.
-4. Statute of Limitations
Asserts too much time has passed since the alleged breach or default for a lawsuit to proceed. In Kentucky, written merchant cash advance agreements fall under the 15-year statute of limitations for written contracts.
Negotiating a Settlement Agreement
Rather than gamble on the outcome of a lawsuit, both sides may prefer to negotiate a settlement agreement. This mutually beneficial resolution can save time and legal expenses for everyone involved.In a merchant cash advance settlement agreement, the MCA company agrees to accept lump-sum payment of an amount less than what you owe in exchange for releasing their claim.A good lawyer will start negotiations at an offer equal to your original advance minus any repayments already made. This puts you back in the same cash position had you never entered the agreement.The final settlement amount will likely fall somewhere in the middle after back and forth counteroffers. Make sure all negotiation conversations and final terms are documented in writing. And don’t agree to any new payment terms that could restart collection efforts down the road.
Finding the Right Kentucky Business Attorney
Dealing with legal issues related to a merchant cash advance can be stressful. But finding an experienced Kentucky attorney familiar with these specialized financing agreements will give you invaluable peace of mind.As you conduct your search, ask candidates about the following to ensure they are qualified:
-- Experience with MCA agreements – Have they dealt with cases specifically involving merchant cash advances before? If not, look elsewhere.
- Settlement record – What’s their track record negotiating lump-sum payoffs? Higher settlement amounts recovered means more potential savings.
- Fee structure – Avoid lawyers charging hourly. Find one who works on contingency, taking a percent of the savings achieved. This incentives maximizing your settlement.
Relief from the burden of a merchant cash advance is possible. With an attorney well-versed in Kentucky debt law by your side, you can negotiate an affordable payoff settlement so your business can move forward.