Ohio Merchant Cash Advance Legal Help – Attorneys, Debt Settlement
Merchant cash advances (MCAs) have become an increasingly popular form of alternative business financing in Ohio over the past decade. Unlike traditional bank loans, MCAs provide fast access to capital without requiring strong credit scores or collateral.However, MCAs also come with some major drawbacks that business owners should understand before signing on the dotted line. In particular, the costs and terms of MCA agreements can be confusing and predatory if you don’t know what to look out for.If you took out a merchant cash advance in Ohio and are now facing legal issues or aggressive debt collection tactics, don’t panic – help is available. In this article, we’ll break down everything you need to know about your legal rights and defenses when it comes to problematic MCAs in the Buckeye State.
The Legal Landscape of MCAs in Ohio
Merchant cash advances occupy a legal gray area in many states, including Ohio. Here are some key things to understand:
-- MCAs are not considered “loans” under Ohio law. Instead, MCA companies claim to be simply “purchasing” a portion of a business’s future credit card sales revenue. This distinction allows them to charge exceedingly high interest rates and fees that would otherwise violate state usury caps on loans.
- There are currently no Ohio laws regulating MCA financing rates or terms. So MCA providers can set their own rules, which often change to the disadvantage of borrowers.
- MCA contracts frequently contain “confessions of judgment.” These clauses allow the MCA company to obtain a judgment against the borrower if they claim a default occurred, without giving the business owner a chance to respond in court.
So in short – MCAs in Ohio operate in a gray zone with little oversight, giving predatory lenders a lot of room to take advantage of small business owners through confusing terms and aggressive collection tactics.
Common Ohio MCA Scams and Abuses
While certainly not all MCA companies are predatory lenders, many rely on tricks and false promises to trap unwary borrowers. Some common Ohio MCA scams include:
- Failing to clearly disclose actual costs and repayment terms. MCA providers often downplay or obfuscate the true costs through complex formulas. Effective interest rates can exceed 100-200% APR.
- Making false or misleading statements about conditions and consequences. MCA sales reps may claim that payments are conditional based on credit card receipts, when in reality the contracts make business owners personally responsible for the full amount regardless of sales.
- Using or threatening to use confessions of judgment to seize assets. Even when business revenues drop unexpectedly, MCA companies can obtain quick judgments and levy bank accounts based on COJ clauses in the contracts, despite verbal assurances to the contrary.
- Illegal overcharging and “double-dipping.” Some MCA companies unlawfully inflate the outstanding balance or charge fees multiple times for the same purported default.
- Harassing borrowers struggling to make payments. If a business misses payments, overly aggressive debt collection tactics like nonstop calls, threats to contact customers, and even threats of violence may follow.
If you feel an Ohio MCA provider has engaged in any misleading, abusive, or illegal conduct like that described above, a business lawyer can help you understand your rights and options.
Ohio Merchant Cash Advance Defenses
The good news is that even if you signed an exceptionally unfair MCA contract in Ohio, you may have legal defenses that an experienced attorney can raise on your behalf, such as:
-- Unconscionability – If the terms of the MCA agreement are unduly harsh or one-sided in favor of the lender, an Ohio court may deem the contract unconscionable and unenforceable.
- Usury violations – There is an argument to be made in some cases that MCA transactions constitute illegal loans subject to state usury laws due to the lender’s conduct. If so, the contract may be void and uncollectible.
- Breach of contract – If an MCA provider failed to fulfill clear promises made to you, such as conditioning payments on credit card receipts, you may have a breach of contract claim against them.
- Violations of lending laws – In certain circumstances, Ohio’s mortgage and consumer lending statutes may be used to challenge predatory MCA tactics.
- RICO claims – Under federal racketeering laws, predatory lending schemes like those described above could potentially give rise to Racketeer Influenced and Corrupt Organizations (RICO) civil claims.
The viability of these defenses depends heavily on the specific facts and conduct involved in your case. Having an experienced Ohio business attorney review your MCA agreements and interactions with the lender is key.
Attorney Can Negotiate Settlement or Sue for Damages
In many cases, shady merchant cash advance companies quickly back down and agree to favorable settlement terms once they realize you have a skilled lawyer ready to fight back.Through negotiations or litigation, a good attorney may be able to convince the MCA provider to:
- Reduce the balance owed to more reasonable levels
- Lower ongoing payment amounts
- Extend the payment term so monthly dues are affordable
- Waive contract provisions like confessions of judgment
- Release the client from personal liability or guarantees
- Remove negative credit reporting
If negotiations fail and the lender refuses to settle in good faith, filing a lawsuit for monetary damages or contract rescission is the next step.
How Much Does MCA Legal Help Cost?
The cost of attorney representation in Ohio merchant cash advance disputes varies depending on factors like:
- Complexity of the case
- Time required for review, negotiations, and litigation
- Experience level of the lawyer
- Whether representation is limited to settlement talks or goes through trial
However, most attorneys dealing with MCA issues provide flexible fee structures to ease the burden, such as:
-- Free or low-cost initial consultations
- Contingency fees based on settlement/judgment amounts
- Payment plans
So do not let worries over legal costs deter you from exploring your rights and options. Any decent attorney will work with you to make their services affordable. The potential savings and peace of mind are well worth it.
Choosing the Best Ohio MCA Attorney
As MCA legal issues can get highly complex, it pays to be selective when choosing legal counsel. Look for an Ohio attorney with specific experience dealing with merchant cash advance agreements and disputes, such as:
- Knowledge of industry practices, terms, and loopholes – You want someone already familiar with how MCA companies operate, common traps in their contracts, and weaknesses to leverage in your favor.
- Record of successful settlements and judgments – Ask prospective attorneys about their track record negotiating, settling, or litigating cases against MCA lenders. Experience matters.
- Passion for defending small businesses – Find a legal advocate who cares about protecting companies from predatory lenders, not just taking your money. Personality and principles count too.
Also pay attention to reviews from the lawyer’s past MCA clients for insight into their responsiveness, transparency, and effectiveness across the board.
-Where to Get Help with an Ohio MCA Case
If you need legal help related to a problematic merchant cash advance agreement in Ohio, a good starting point is reaching out to consumer protection organizations like the Ohio Attorney General’s Office or Ohio Consumer Protection Association. They can point you to attorneys in your area who assist small business owners with predatory lending disputes.National legal directories like Avvo, FindLaw, and Justia also list profiles of Ohio lawyers experienced with MCA cases who offer free consultations.Additionally, some law firms focus specifically on assisting companies across the country who have been victims of MCA scams and abuse. They have knowledge of Ohio laws and courts as well as an inside understanding of how predatory lenders operate nationwide.
Don’t Delay – Get Help Fighting Back!
Dealing with merchant cash advance legal problems can be intimidating, but waiting rarely makes things better. The sooner you consult an attorney familiar with Ohio MCA cases, the more leverage you will have.You also want to act quickly to prevent additional late fees from accruing, new judgments from being entered, or other collection efforts from ramping up against your business.Even if the MCA agreement you signed locks you into payments for years, there are still ways out with the right legal strategy and advocacy on your side. Don’t struggle alone – help is a phone call away!