Struggling with debt?

What Happens if You Don’t Pay Back a Merchant Cash Advance?

Delancey Street offers a MONEY BACK GUARANTEE for debt relief services

Regardless of your financial distress. Regardless of how many stacked advances you have. Regardless of how dire you believe your situation is. We can help you.

Delancey Street Saves a Business Owner Over $400,000!

Yes, we’ve done it before. We’ve reduced the principal owed by huge margins, extended the repayment term, and stopped lawsuits in their tracks. Our DEDICATED and EXPERIENCED attorneys can fight for you too.

Here’s the bottom line: Defaulting on a merchant cash advance can lead to serious consequences. It can mean lawsuits, liens, potentially overwhelming hits to your personal credit, and even personal asset seizures if a personal guarantee exists.

But guess what? There are ways to handle this. Keep reading, because we’re about to reveal everything you need to know, plus how we defend you step by step.

1. The Legal Consequences of Not Paying Back an MCA

Merchant cash advances aren’t ordinary loans. They’re advances on your future credit card sales. You sign an agreement to repay through a percentage of your daily (or weekly) credit card receipts. If you fail to make your payments:

• Confession of Judgment (COJ) Enforcement
  A confession of judgment is a legal document which allows an MCA provider to obtain a judgment without a formal court proceeding. Some states have restricted the use of COJs, but others still permit them. For more information, see the official resources at FTC.gov which discusses certain lending and collection practices.

• Potential Lawsuits and Judgments
  The MCA provider may sue your business. If you offered a personal guarantee, you could be personally named in the lawsuit. Once a judgment is entered, the creditor can pursue garnishments or levies.

• Damage to Your Credit Score
  Missed payments or defaults often get reported to commercial credit bureaus. In addition, personal credit can be impacted if a personal guarantee exists, or if the lender sues you individually.

• Seizure of Business Assets
  If the agreement includes a UCC filing (Uniform Commercial Code lien), the MCA provider could potentially seize the assets covered under that lien.

• Overwhelming Fees and Penalties
  MCA providers sometimes tack on late fees, administrative fees, or default penalties. These costs compound fast. According to ConsumerFinance.gov, businesses often face escalated collection tactics when dealing with certain forms of alternative financing.

2. Potential Penalties Under the Law

When you signed your MCA agreement, it likely contained specific clauses about default and penalties. Some might be enforceable under your state’s laws, others might be unenforceable or predatory in nature.

• High-Factor Repayments
  If the agreement includes a factor rate of 1.3, 1.4, or even 1.5, you’re automatically on the hook for that total amount (advance x factor). Missing payments can accelerate everything.

• Acceleration Clauses
  Many MCA agreements have acceleration clauses. These permit the provider to demand all of the outstanding amount due immediately upon default.

• Impossible to Keep Up with Daily/Weekly Repayment
  Because MCAs are repaid from your daily or weekly sales, missing payments can trigger an immediate default. This can quickly escalate into a legal crisis.

• Possible Criminal Allegations
  Rarely, if there’s suspicion of fraud—like misstating sales or bank balances—an MCA provider might attempt to pursue criminal claims. While true fraud is a separate matter, it underscores the seriousness of default. For more on business fraud, see the guidelines at Justice.gov.

3. Defense Strategy: How Delancey Street Fights for You

We fight. We protect. We negotiate. We reduce your overall business debt.

At Delancey Street, we excel in business debt settlement. Our team (including attorneys and debt specialists) will:

• Review the Agreement
  We review the MCA contract for illegal or predatory provisions. We check factor rates, compliance with state laws, and more.

• Challenge Confession of Judgment Clauses
  Certain states have clamped down on COJs for out-of-state clients. Our attorneys review the enforceability of your COJ, which may help us dismantle judgments against you.

• Negotiate Reduced Balances
  Our team focuses on creating a plan you can manage. Our results speak volumes: We’ve successfully helped 100’s of businesses, often negotiating up to 70% off the total amount owed.

• Stop Your Accounts from Being Frozen
  If the MCA provider is trying to freeze your accounts or seize assets, we move quickly to protect your business operations.

• Money Back Guarantee
  We offer a MONEY BACK GUARANTEE for debt relief services. We are DEDICATED to delivering results—and if we can’t, we stand by our commitment to you.

4. Stream of Consciousness: How an MCA Case Can Be Dismantled

Look, we get it. Sometimes, it feels like the MCA provider has all the power. But that’s not always true.

1. Extremely High Factor Rates
   Some courts see extremely high factor rates as disguised usury. There are laws in many states. In some states, lenders are required to list the factor rate as an APR rate so you know what you’re actually paying.  If your factor rate is extremely high, we can argue the MCA is effectively a high-interest loan in violation of certain usury statutes.

2. Lack of Clarity
   Were you given a clear statement of how much you’d pay daily or weekly? If the agreement was unclear or lacked mandatory disclosures, there’s potential leverage.

3. Pressure Tactics & Predatory Language
   If the MCA provider used pressure tactics or misrepresented their product as “just a friendly advance,” you might have consumer protection defenses, especially if they violated the Federal Trade Commission Act. Many lenders are unafraid of lying.

4. Negotiation with Lenders
   Because your lender wants some payment rather than seeing you go out of business, you can often settle. Lenders just want a payment plan. If that fails, we try a litigation defense or restructure strategy.

5. Practical Tips and Government Resources

• Talk to Your MCA Provider
  Sometimes, open communication goes a long way. Many MCA lenders want to just talk to you, in order to get info on where your business is. They want to make sure you’re not running away with their moeny. Many MCA providers would rather work out a payment plan than escalate matters.

• Review Options for Debt Restructuring
  The SBA (Small Business Administration) provides info on alternative financing and business debt relief at SBA.gov.

• Gather Your Documents
  Have all your loan or MCA agreements, bank statements, and communications with lenders in order. It’ll be necessary to understand where to pick up . This documentation helps attorneys build a thorough defense or negotiation strategy.

• Evaluate Nonprofit Counseling
  Nonprofits may offer business debt management advice at lower prices and management fees. While not always equipped to handle complex MCA issues, they’re a place to start.