Tucson Merchant Cash Advance Legal Help – Finding the Right Attorney
Running a small business can be tough, especially when cash flow gets tight. Many Tucson business owners turn to merchant cash advances to bridge the gap. But these financing products come with risks – predatory terms, exorbitant fees, and aggressive collection tactics. If you feel trapped in an abusive agreement, don’t despair – legal help is available. Read on to learn about your options and how to find an attorney who can protect your interests.
How Merchant Cash Advances Work
Unlike traditional small business loans, merchant cash advances (MCAs) are technically cash purchases of future credit card sales. Here’s a quick rundown:
-- The MCA company provides an upfront lump sum, often between $5,000 – $500,000
- In exchange, the business agrees to repay the advance through a fixed percentage of daily credit card receipts
- There’s no set repayment schedule – the split rate and daily batch determine the total amount repaid
- Rates typically range from 1.10 to 1.50, meaning the business repays 110% to 150% of the original advance
This quick access to capital can be a lifeline for struggling companies. But the flexibility and convenience come at a cost – extremely high effective APRs topping 350%. And if sales drop too low, aggressive collection efforts often follow.
Common Legal Issues with Merchant Cash Advances
While they seem straightforward on the surface, MCA agreements contain hidden risks. Savvy small business owners work with lawyers to fully understand these products before signing. Some examples of problematic clauses include:Deceptively High Costs
- Fixed-rate loans would require Truth in Lending Act (TILA) disclosures about APR and total costs. But MCAs skirt these rules through technicalities.
- Without clear fee disclosures, business owners can underestimate the actual repayment burden.
Overreaching Security Interests
- Many MCA contracts secure the advance against all business assets as collateral.
- This gives the MCA company extensive repossession and foreclosure rights in a default.
- Broad security interests also interfere with future financing options.
Onerous Default Triggers
-- Missing a single daily payment often triggers harsh default penalties – immediate full repayment, penalties, or freezing the account.
- These “trigger events” turn manageable hiccups into catastrophic defaults.
Aggressive Collections
- Default also opens the door for aggressive collections – harassing calls, lawsuits, or even sending fake legal documents.
- Some MCA companies rely on deceptive tactics to intimidate business owners into paying.
Restrictive Covenants
- Non-compete clauses, automatic renewals, and limiting future financing options all tilt agreements in the MCA company’s favor.
- Overreaching terms restrict businesses long after the advance is repaid.
Having an attorney review the full MCA agreement can uncover risks like these before problems arise. The right lawyer can also negotiate better terms or steer clients toward safer products.
Finding the Right Legal Help in Tucson
If you feel trapped in an abusive MCA agreement, taking legal action may be your best recourse. But finding knowledgeable counsel is critical – general practice lawyers often lack experience with these specialized contracts. When choosing an attorney to dispute a merchant cash advance in Tucson, look for these key qualifications:1. Specific MCA/Business Financing Expertise
- Ask about the lawyer’s history dealing with merchant cash advances and alternative small business financing disputes.
- An attorney who regularly handles these cases will know the most effective arguments and strategies.
2. Local Experience Litigating in Tucson Courts
-- Understanding local judges, legal precedents, and rules helps lawyers craft arguments that resonate with courts.
- Look for counsel licensed and based in Tucson with a proven local track record.
3. Willingness to Litigate Aggressively If Needed
- To get the best possible settlement, you need an attorney who can and will take cases to trial.
- Many lawyers lack litigation experience or shy away from court battles – make sure prospective counsel is ready to fight for your rights.
The Avvo directory is a great place to find experienced Tucson business and finance attorneys. You can read backgrounds, client reviews, and contact lawyers directly with legal questions about your case. The Tucson Bar Association also provides referrals to qualified local member attorneys.
Legal Defenses Against Merchant Cash Advance Abuse
Challenging an MCA in court requires in-depth contract analysis and financial modeling to identify violations. Typical legal arguments include:Unconscionability
-- If agreement terms unreasonably favor the MCA company, courts may void all or part of the contract.
- Lawyers argue that excessive rates or overly harsh default clauses are unfairly one-sided.
Usury Violations
- Though MCAs claim to be cash purchases, the transaction resembles a loan. Attorneys build financial models showing extremely high implicit interest rates.
- If courts accept the loan characterization, usury laws cap maximum legal rates – voiding excess charges.
Deceptive Practices
- Under consumer protection laws, hiding costs or using intimidation tactics count as unfair and deceptive practices.
- Violations allow courts to void contracts and order financial penalties against MCA firms.
Breach of Contract
- If the MCA company violates notice requirements, changes terms without consent, or otherwise breaches the agreement – the entire contract could be void.
With an experienced attorney, one or more of these arguments offer a legal path out of abusive MCA agreements. The right lawyer can also negotiate settlements releasing business owners from unfair contracts in exchange for reduced repayments.
Alternatives to Litigation – Debt Settlement for Merchant Cash Advances
Though building a strong legal case is important, trials can be time-consuming and unpredictable. Many small business owners pursue settlements or debt relief alternatives instead of fully litigating MCA disputes. Options like debt settlement negotiate agreements that reduce your repayment burden in exchange for closing cases out of court.Here’s an overview of the debt settlement process:1. Review the Agreement
- Debt settlement firms start by thoroughly analyzing the original MCA contract to understand your obligations and identify violations.
2. Notify the MCA Company
- Next, they contact the MCA provider, explain alleged violations, and propose a settlement. This opens negotiations.
3. Negotiate a Reduced Payment
- Leveraging their expertise and the looming threat of litigation, settlement companies negotiate to reduce the remaining amounts owed.
4. Make an Upfront Payment
- Once both sides agree to a discount repayment amount, you would make a lump-sum payment, often using dedicated settlement funds.
5. Get Documentation Releasing Further Obligations
- Upon payment clearing, the MCA company would provide documentation releasing all further repayment obligations or contract claims.
Though results vary case-by-case, reputable settlement firms often negotiate 40% – 60% discounts off remaining contract balances. And the agreements you sign would include much more favorable terms around payments, timing, security interests, and default triggers.
Finding the Right Debt Settlement Partner
As with legal disputes, working with an experienced settlement company is critical to success. Here are key credentials to look for as you evaluate firms:Industry Expertise
- Search for a provider with extensive experience specifically negotiating merchant cash advance and alternative business financing settlements. General debt settlement experience isn’t enough.
Legal Connections
- The best firms maintain close partnerships with litigation attorneys. This allows them to credibly threaten lawsuits, strengthening their negotiation posture.
Transparent Fees
- Beware companies trying to hide their fees or overpromising unrealistic discounts. Good settlement partners clearly explain their pricing models upfront.
Positive Online Reviews
- Research third-party review sites to make sure past clients were satisfied with the negotiation results and the firm’s customer service.
As a starting point, Freedom Debt Relief and Pacific Debt both have strong reputations helping business owners reduce merchant cash advance repayment burdens through settlement agreements.
Don’t Face Abusive Lenders Alone – Legal Help is Available
Predatory merchant cash advance companies exploit small business owners’ desperation for working capital. But you don’t have to face these abusive tactics alone. Finding the right legal counsel or debt settlement partner can help eliminate unfair contracts and predatory debt burdens.I encourage any Tucson business owner struggling with a merchant cash advance to connect with specialized local attorneys to discuss their rights and options. The initial consultations are often free. There are also legitimate debt settlement firms who can negotiate reduced repayments on your behalf.With expert help, abusive MCA agreements don’t have to be a death sentence for your company. Take back control and set your business on a sustainable path forward with legal and financial assistance. Relief is possible – you just need to take the first step and ask for help.