Memphis Merchant Cash Advance Legal Help – Attorneys, Debt Settlement
Merchant cash advances can seem like easy money for small business owners, but they often come with predatory terms and sky-high interest rates that can quickly spiral out of control. If you’re a Memphis business owner who took out a merchant cash advance and is now facing legal threats or aggressive collection tactics, don’t panic. You have rights under federal and Tennessee state law. With the help of an experienced business finance attorney, you may be able to negotiate a settlement, reduce the amount owed, or even get the agreement invalidated.
Know Your Rights Under Federal Law
Merchant cash advance companies are not actually lenders. Instead, they purchase a percentage of your future credit card sales, advances are not technically loans so Truth in Lending Act disclosures don’t apply. However, collection activities are still regulated under the Fair Debt Collection Practices Act (FDCPA).
- Collectors cannot harass or threaten you, lie about the debt, or discuss it with third parties without permission. Violations may entitle you to $1,000 plus damages 1.
Collectors must validate debts if disputed in writing within 30 days. Failure to do so means they cannot legally try to collect .
So before paying anything, dispute the debt and demand validation. This at least buys you some time.
-Tennessee State Laws Also Help Protect Small Businesses
Tennessee has additional laws around merchant cash advances thanks to the Tennessee Credit Services Businesses Act which regulates companies earning fees from providing credit services:
- Cash advance companies must be licensed and bonded through Tennessee regulators. If yours isn’t, the agreement may be void.
- Even licensed companies cannot charge excessive fees compared to industry norms. Fees above 15-20% could be deemed unlawful .
- Threatening borrowers with criminal charges is prohibited. Cash advance debts are civil matters.
Work With a Business Finance Attorney
Renegotiating or invalidating a merchant cash advance takes experience. An attorney can review your agreement for violations of state and federal law. They may find ways to reduce the amount owed or have it waived entirely. Even if the agreement holds up, they can still negotiate settlements on your behalf.I recommend contacting attorneys like those found on <a href=”https://www.avvo.com/business-lawyers/tn/memphis.html”>Avvo</a> and <a href=”https://www.lawinfo.com/memphis-business-lawyer.html”>LawInfo</a> who specialize in Tennessee commercial finance cases. Look for ones with positive reviews handling debt settlement and litigation. Meet with several before deciding who best fits your needs and budget.
What Laws Might Provide Defenses?
There are a few legal arguments that could potentially invalidate your agreement or reduce what you owe:
- Unlicensed Lender – If the company isn’t registered through Tennessee regulators like required, the contract may not be enforceable.
- Unconscionable Terms – Fees above 15-20% of the advance amount could be deemed excessive interest in violation of state law. This may invalidate the fees or even the entire agreement.
- Misleading Statements – If the broker misrepresented terms like the repayment amount, interest rate or made other deceptive statements, that could make the contract voidable.
- Improper Collection Efforts – Harassing communications, discussing debt with unauthorized third parties or threatening legal action not intended to be taken violates state and federal collection laws. This helps in negotiating settlements and may allow damages lawsuits against the collector.
What Are the Pros and Cons of Fighting Back?
Challenging an underhanded merchant cash advance company takes courage but may pay off in the end. Still, there are tradeoffs to consider when deciding your best course of action:
-Potential Pros
- Get the agreement invalidated so the debt goes away
- Negotiate a lower payoff amount
- Recover monetary damages to offset what you owe
- Stop harassment from collectors
Potential Cons
- Legal help costs money upfront through retainers and hourly billing
- No guarantee you’ll win in the end
- Could take months to resolve which prolongs the stress
- Company may retaliate by ruining your credit or business reputation
So while fighting back is totally justified and often successful, anyone considering it needs to realistically weigh risks and rewards. The laws tend to favor consumers in these situations but court outcomes are never assured.
What Are Some Tactical Recommendations?
Here is my advice for Memphis business owners disputing predatory merchant cash advances:
- Record all interactions – Tennessee is a “one-party consent” state so you can legally record phone calls without notifying collectors. This protects against harassment.
- Submit written disputes ASAP – Dispute debts in a formal letter sent certified mail. This triggers legal protections and stops collections until they validate what’s owed.
- Gather all documents – Collect the signed contract, communications with the broker, receipts for payments made, etc. This evidence helps attorneys evaluate defenses.
- Be proactive – Don’t wait until sued to act. The sooner you engage a lawyer on your side, the more leverage you’ll have negotiating.
- Mind your credit – Expect retaliation through credit reporting if you stop paying. This is illegal given proper dispute letters but still happens. Be ready to monitor your credit and challenge errors.
- Consider bankruptcy – If debts are totally unmanageable, bankruptcy may be the most effective path to protect assets and stop collections. An experienced attorney can advise if this makes sense.
Finding the Right Attorney for Your Situation
The most important thing is finding an attorney well-versed in Tennessee merchant cash advance laws. Someone who regularly handles commercial finance cases will know all potential defenses to explore and how to effectively negotiate settlements. I recommend looking for lawyers with:
-- Positive reviews – Search sites like Avvo, Lawyers.com and Martindale to read feedback from past clients. Make sure they have at least a 4 out of 5-star overall rating.
- Industry experience – Prioritize attorneys and firms specializing in financial services litigation, debt resolution, small business disputes and related areas. Check bios to confirm they regularly handle cases like merchant cash advances.
- Local expertise – You want someone well-versed in Tennessee laws and courts plus the local business climate. Out-of-state lawyers may not understand key nuances that could impact your case.
- Personality fit – Since you’ll be working closely together under stress, make sure your communication and working styles mesh well. Meet by phone or video chat before committing to ensure you click.
Also ask about pricing models during consultations. Most attorneys charge retainers upfront then bill hourly. Make sure rates fit your budget and get fee estimates in writing.
Don’t Go It Alone
Trying to negotiate merchant cash advance settlements yourself rarely goes well since companies know most owners lack legal expertise. They leverage this power imbalance to strong-arm unfair outcomes.With an attorney as an equalizer, however, the tables turn in your favor. Let them handle communications while you focus on running your Memphis business. With both federal and Tennessee state laws offering protections, fighting back against predatory behavior pays off more often than not. But timing and strategy are everything, so consult capable legal counsel as early as possible.