Steven Raiser is Chief Legal Officer, and Legal-Counsel at Delancey Street. Steven is a native of Long Island and has also resided in Manhattan and the Bronx.
Since being admitted to the New York Bar, Steven has represented the city of New York, serving as a Special Assistant Corporation Counsel. He handled all aspects of litigation in child neglect cases there, representing the interests of the children and the city. He then served as an Assistant District Attorney, where he successfully prosecuted hundreds of criminal cases, from violations of the Vehicle and Traffic Law to homicides. During his time as a prosecutor, Steven was involved in high-profile cases such as those involving Rapper DMX and NY Rangers’ Defenseman Sandis Ozolinsh.
While serving as a prosecutor, he joined the U.S. Army. As a commissioned officer in the Army National Guard Judge Advocate General’s Corps, Steven volunteered for active duty in Iraq. There he served in the office of the Staff Judge Advocate, defending soldiers from actions instituted by the federal government, making probable cause determinations for the command, and assisting in the training of Iraqi soldiers in legal proceedings. In recognition of his service in Iraq, he earned the Global War on Terrorism Expeditionary Medal for meritorious service in support of Operation Iraqi Freedom and the Army Commendation Medal for exceptional meritorious service during combat operations. He, along with his unit, received the New York State Bar Association’s Award for Excellence in Public Service and was presented with our state flag by Senate Majority Leader Joseph Bruno.
-Steven M. Raiser is admitted to practice law in the state courts and federal court in the Eastern District. On November 14, 2010, he was sworn in to the United States Supreme Court by Chief Justice John Roberts in Washington, D.C. Steven has appeared as a legal analyst for FOX, CNN, and Court TV (TRU TV). His interviews on CNN and FOX have been posted to their websites and have been showcased under “must see videos.”
Navigating Merchant Cash Advance Debt Settlement
Merchant cash advances can provide quick access to capital for small businesses, but they also come with risks. If your business has fallen behind on merchant cash advance payments, you may be dealing with aggressive collection tactics and facing hefty penalties and fees. Debt settlement may be an option to resolve your merchant cash advance debt for less than the full balance. Here’s what you need to know about merchant cash advance debt settlement.
-Understanding Merchant Cash Advances
A merchant cash advance is a form of business financing where a company provides a lump sum of capital to a business in exchange for a percentage of future credit card sales. The merchant cash advance company deducts a fixed daily amount from the business’s credit card receipts until the full balance has been repaid plus fees.
Unlike a business loan, merchant cash advances are not subject to the same regulations. There is no fixed term or payment schedule. The daily repayment amount is instead tied to credit card sales volume – the higher the sales, the faster you pay back the advance.
This flexibility can be helpful for businesses with irregular cash flow. However, the costs can also quickly spiral out of control. Merchant cash advance companies typically charge very high effective interest rates ranging from 30-300% APR when fees are included.
The Risks of Merchant Cash Advances
While merchant cash advances provide quick and easy access to capital, there are several downsides business owners should be aware of:
- High rates and fees – In addition to deducting fixed daily payments, companies charge various fees for origination, underwriting, and more. These costs add up resulting in exponential returns for the lender.
- Daily repayment pressure – There is pressure each day to generate enough credit card sales volume to cover the fixed deduction amount. This can be challenging with seasonal slowdowns.
- Potentially endless payments – Since there is no fixed repayment term, you could end up repaying far more than the original advance amount if sales are low. Payments only cease when the full balance has been repaid.
- Aggressive collections – If you fall behind on payments, merchant cash advance companies may engage in aggressive tactics like harassing calls, demanding immediate repayment in full, or attempting to freeze your bank accounts.
- Damaged credit – Defaulting on a merchant cash advance can result in the company reporting late payments to business credit bureaus, hurting your ability to access financing in the future.
If your business is facing these issues, debt settlement may help you resolve merchant cash advance debt for less than you owe.
-What is Debt Settlement?
Debt settlement, also known as debt arbitration or debt negotiation, is an approach for resolving unpaid debts for less than the full balance owed. It involves negotiating directly with creditors or working with a debt settlement company as an intermediary.
The process typically involves:
- Ceasing payments to creditors so accounts fall into default
- Allowing debts to become delinquent and charge off as bad debts
- Negotiating a lump sum settlement payment for a reduced balance
- Getting creditors to agree to forgive the remaining amount
Settlements usually resolve debts for 40 to 60% of what is owed. Amounts forgiven by creditors are treated as taxable income.
-Debt settlement does have risks of damaging your credit score and facing collection lawsuits. However, it can be an option if you have few assets, your debts are unsecured, and you can afford reasonable settlement offers.
Can You Settle Merchant Cash Advances?
Merchant cash advance debt can typically be resolved through settlements since this financing essentially functions as an unsecured loan or line of credit.
There are some key factors to consider when seeking to settle merchant cash advance debt:
- Review your agreement – Understand the fees and potential penalties for default specified in your contract. This will impact negotiation leverage and settlement strategy.
- Consult a lawyer – An attorney can review your agreement for any prohibited terms or violations that could help invalidate the debt. Violations may strengthen your position to negotiate a discount.
- Get statements and payment history – Document how much you have already repaid on the merchant cash advance and gather records showing payments deducted from your accounts.
- Determine settlement percentage – Estimate a reasonable lump sum settlement offer based on your specific situation. Offers below 40% of the balance owing are unlikely to be accepted.
- Hire a professional – Work with an experienced debt settlement firm. They have relationships with lenders and understand negotiation tactics to get merchant cash advance creditors to agree to reduced payoffs.
With the right approach, it is possible to settle merchant cash advance debts through lump sum payments for an amount far less than the full balance owed. However, credibility is crucial – don’t make lowball offers you can’t back up with funds when the time comes.
The Debt Settlement Process
The debt settlement process typically follows these main steps:
1. Stop Making Payments
You first need to fall behind on your merchant cash advance to give you leverage to negotiate. This leads the creditor to mark your debt as delinquent and ultimately charge it off since you are no longer paying as agreed. Charge off status makes the creditor more willing to consider settlements since they assume they will not recoup the full amount.
2. Receive Collection Calls and Letters
Once you default, expect to start getting collection calls and letters demanding repayment. Do not agree to any payment plans – stick to your intent to settle for less than owed. Letting the merchant cash advance company know you are working with a debt settlement firm can also deter aggressive collections.
3. Submit Settlement Offer
After a few months of missed payments, you can submit your first settlement offer. Typically 40-60% of the outstanding balance is considered reasonable. If the creditor rejects the initial offer, your debt settlement firm can negotiate and resubmit progressively higher offers until an amount is accepted.
4. Settle the Debt
Once your lump sum settlement offer has been agreed to, you will have a set timeframe (usually 3-6 months) to come up with the negotiated funds. The debt settlement company can arrange getting an official settlement letter stating repayment of the agreed amount resolves your debt in full.
5. Receive Forgiveness Letter
On receipt of your negotiated payment, the merchant cash advance company must send a forgiveness letter acknowledging your debt is now legally satisfied and no further amounts are owed. With this document, the account will be closed and collections should cease.
Finding the Right Debt Settlement Company
A reputable debt settlement firm is key to successfully reducing and resolving your unpaid merchant cash advance balances for less than the full total owed. Look for an experienced company that:
- Has been in business for several years and has settled merchant cash advance debt specifically in the past
- Is transparent about fees (usually based on savings achieved on settled debt)
- Allows you to review and accept settlement offers before finalizing
- Has relationships with merchant cash advance creditors to facilitate better negotiation outcomes
- Provides guidance on managing finances during program to save for settlements
- Supplies regular updates on settlement progress