UNDERSTANDING MERCHANT CASH ADVANCE CONTRACTS AND CONFESSIONS OF JUDGMENT
DELANCEY STREET OFFERS A MONEY BACK GUARANTEE FOR DEBT RELIEF SERVICES
Regardless of your current debt. Regardless of your business size. Regardless of the complexity of your contract. We at Delancey Street – a TOP-TIER BUSINESS DEBT RELIEF COMPANY – can help you understand the hidden dangers of merchant cash advance contracts and Confessions of Judgment (sometimes known as COJs). These instruments might seem simple, but if you’re not prepared, they can wreak havoc on your finances.
WHAT IS A MERCHANT CASH ADVANCE?
A merchant cash advance (often abbreviated as MCA) gives you immediate money in exchange for a portion of your future credit card sales. While it might feel like a quick fix, MCAs carry extremely high factor rates and very aggressive repayment terms. Often, you’re paying 100-200% APR. The Federal Trade Commission (FTC.gov) provides information on the abusive lending practices used by MCA companies which can accompany some of these products.
EXPERIENCED
We’ve seen how a merchant cash advance can spiral into excessive debt, and even potential bankruptcy. We fight. We protect. We negotiate. That’s why Delancey Street focuses on business debt relief methods which help you avoid going out of business. Because ultimately, no lender wants you to file bankruptcy, and no business period wants daily repayment deductions that kill its cash flow. Ultimately, the merchant cash advance lenders just wants their money back – and if they see you’re serious about paying them back – it’s possible to negotiate a settlement. When you hire Delancey Street – you’re negotiating from a position of strength.
WHAT IS A CONFESSION OF JUDGMENT (COJ)?
A Confession of Judgment is a legal tool allowing the MCA provider to bypass certain courtroom procedures if you default. They can file the signed confession in court without ever needing a trial. In places like New York State, this is governed by NY Courts – Confession of Judgment Statutes under CPLR § 3218. Other states have varying rules, and the Consumer Financial Protection Bureau (consumerfinance.gov) has scrutinized these confessions in consumer-oriented contexts.
WHY DOES A COJ MATTER?
• Immediate Judgment: The MCA provider can secure a judgment against you the minute you miss a payment.
• Asset Seizure: Once the judgment is in place, it can result in frozen bank accounts, liens on property, and aggressive collection tactics.
• Personal Guarantees: Many MCAs require them, which means they can come after your personal assets too.
If you’ve signed a COJ, it doesn’t mean all hope is lost. Regardless of the predicament, there can be strategies to contest or invalidate it.
PENALTIES AND LEGAL RAMIFICATIONS
Penalties for breaking a merchant cash advance agreement (with a COJ included) can be brutal. Lenders can tack on fees, acceleration clauses, and default interest, and other default legal fees. Some lenders operate in legally gray areas, which is why regulatory agencies – like the Federal Trade Commission – keep a watchful eye. Also, certain states have begun limiting or banning COJs for businesses located outside that state’s borders (see relevant info at FTC.gov or at your state Attorney General’s website).
Plus, if any part of the MCA contract or Confession of Judgment is considered usurious or unconscionable (e.g., disguised as a “purchase of receivables” but in reality functioning like a loan), the entire contract can be challenged.
LEGAL STRATEGIES FOR DEFENDING AGAINST CONFESSIONS OF JUDGMENT
Hiring the right team matters. Delancey Street – with our experience in business debt relief and our sister law firm resources – can often help you dismantle or renegotiate these tough situations.
Possible defense strategies include:
- Challenging Unconscionable Terms
We review your MCA agreement to see if the repayment structure or factor rates exceed permissible levels. In many jurisdictions, an extremely high rate may be considered usurious and could void the contract. - Verifying State-Specific Requirements
COJs are not valid in every state, and some COJ’s require very specific wording. The COJ is a very technical document, and it has to be executed properly. We’ll see if your lender followed statutory requirements (e.g., NYCourts.gov for New York’s criteria). Missing signatures or language errors can invalidate the COJ. - Arguing Lack of Consideration
If the MCA didn’t provide any real funding, or charged over 50% in fees, or the funds were never properly disbursed, we can argue there was no real contract. - Proving Fraud or Misrepresentation
If the merchant cash advance lender used misleading marketing tactics or hidden fees, we can raise claims of fraud, referencing guidelines from consumerfinance.gov and relevant state laws.
DEFENSE STRATEGY
We look at your entire financial picture. First we assess your business bank statements using AI. Then we identify every contract you signed. Next we consider how each line item might be challenged. Maybe your factor rate is hidden. Maybe the timing of the disbursements was off. Maybe you never received a critical disclosure. Anyway, we pick every point apart in order to find you a defense strategy that will help your business survive. We tear each line. We question every phrase. We build a strong case against the MCA lender. Eventually, with enough pressure, a settlement or motion to vacate the COJ can materialize.
Here’s the bottom line: The more holes we find, the easier it becomes to negotiate, reduce the overall balance, and prevent personal liability.
ANYWAY – WHAT CAN DELANCEY STREET DO FOR YOU?
AS SEEN ON major media outlets, Delancey Street has helped countless businesses overcome toxic MCA debt without excessive headaches. We’ll use a multi-pronged approach:
• We investigate. We investigate your merchant cash advance agreements and look for abusive clauses.
• We strategize. We talk to lenders, explain your financial circumstances, and push for a payment plan or settlement.
• We defend. If the lender has already filed a lawsuit or used the COJ in court, our legal team take action to challenge them.
• We consolidate. Sometimes, business debt consolidation loans can be used to lump multiple MCAs into one manageable payment, often with lower interest. Learn more about SBA-backed options at SBA.gov.
• We protect. We keep collectors off your back, while we negotiate. Our entire aim is to keep your business afloat and help you avoid going out of business.
MONEY BACK GUARANTEE
We proudly stand by our money back guarantee for MCA debt relief services because we want you to feel safe as we work toward financial freedom. Our entire mission is to help you keep your doors open – and that means you should work with someone whose willing to put their money, where their mouth is.
RESOURCES FOR FURTHER READING
• Federal Trade Commission (FTC.gov): Information on unfair or deceptive lending practices from the government
• Consumer Financial Protection Bureau (consumerfinance.gov): Insights into financial products and consumer rights you have
• Small Business Administration (SBA.gov): Guidance on loans, grants, and business debt strategies if you owe them money
• New York Courts on Confessions of Judgment (NYCourts.gov): Statutory language and procedures
WHAT YOU SHOULD DO IF YOU’RE FACING A CONFESSION OF JUDGMENT
- Act Quickly: Once a COJ is filed, the clock starts ticking. Delays can result in frozen bank accounts or a lien on your assets.
- Contact Your Lender: Show them you’re in a tough spot. Often, lenders want to work with you – especially if you have credible legal backup.
- Retain Legal Help: Confessions of Judgment are extremely technical. Using an experienced attorney who understands business debt relief is crucial.
- Review All Contracts: Don’t just accept the numbers. We might find hidden fees or errors which strengthen your defense.
GUESS WHAT?
It doesn’t end there. Some MCA providers attempt to “stack” multiple advances, burying you in debt. Our best advice? Take action sooner rather than later. The deeper you go, the harder it is to regain control – but it’s not impossible, especially with Delancey Street at your side.
CONTACT US – WE’RE READY
We understand the fear you and your employees are facing, we get the the frustration you and your family are going through, the daily stress. We’ve seen it all. Our business debt relief advisors and attorneys stand by, ready to deal your merchant cash advance predicament. Let us fight for you. We’re dedicated to reducing the total amount you owe, stretching out your repayment schedule, and possibly getting your entire COJ thrown out.