Boston, MA Merchant Cash Advance Defense Lawyers
Are you a small business owner in Boston struggling with a merchant cash advance (MCA) lawsuit? You’re not alone. We’ve seen countless entrepreneurs face aggressive collection tactics and predatory lending practices from MCA companies. But there’s hope. With the right legal strategy, you can fight back and protect your business.
At Delancey Street, we’re passionate about defending Boston businesses against unfair MCA practices. Our experienced attorneys understand the complexities of these cases and know how to level the playing field. Let’s dive into what you need to know about MCA defense in Boston.
Understanding Merchant Cash Advance Lawsuits in Boston
Merchant cash advances might seem like a quick fix for cash flow issues, but they often lead to a cycle of debt that’s hard to escape. When businesses can’t keep up with the daily or weekly payments, MCA companies are quick to file lawsuits – often in New York courts, regardless of where your business is located.
Here’s what typically happens:
- You default on payments
- The MCA company files a lawsuit, often seeking a default judgment
- They may freeze your bank accounts or file UCC liens against your business assets
- You’re left scrambling to defend yourself and keep your business afloat
It’s a scary situation, but you have options. The key is understanding the nature of these lawsuits and acting quickly to protect your rights.
The Legal Landscape in Massachusetts
Massachusetts has some of the strictest usury laws in the country, capping interest rates at 20% for most loans. But here’s the catch – MCA companies argue their products aren’t loans, but “purchases of future receivables.” This clever wordplay allows them to charge effective APRs of 200% or more.
In the landmark case K9 Bytes, Inc. v. Arch Capital Funding, LLC, 57 N.Y.S.3d 625 (N.Y. Sup. Ct. 2017), the court examined whether MCA agreements constituted loans subject to usury laws. The key factors they considered included:
- Whether repayment was absolute or contingent on the merchant’s success
- The presence of reconciliation provisions
- Indefinite repayment terms
- Recourse options in case of bankruptcy
This case highlights the importance of carefully analyzing the specific terms of your MCA agreement when building a defense strategy.
Assessing the Validity of Your MCA Lawsuit
When you’re hit with an MCA lawsuit, your first step should be to assess its validity. Not all lawsuits are created equal, and there may be flaws in the case against you that we can exploit.
Here are some key questions we’ll ask when reviewing your case:
- Was the MCA agreement properly executed?
- Did the MCA company follow all required disclosure laws?
- Are there any signs of fraud or misrepresentation in the original agreement?
- Has the MCA company violated any debt collection laws in pursuing you?
Remember, just because you signed an agreement doesn’t mean it’s enforceable. In Tender Loving Care Homes Inc. v. Reliable Fast Cash, LLC, 172 N.Y.S.3d 335 (N.Y. Sup. Ct. 2022), the court dismissed usury claims but allowed an unjust enrichment claim to proceed due to allegations of unrecorded payments. This shows that even with a valid contract, there may be grounds to challenge the MCA company’s actions.
Gathering Evidence to Support Your Defense
Building a strong defense requires solid evidence. We’ll work with you to gather all relevant documentation, including:
- The original MCA agreement
- All communication with the MCA company
- Bank statements showing payments made
- Any evidence of hardship or changed circumstances that affected your ability to pay
It’s crucial to be thorough. Even small details can make a big difference in court. For example, if the MCA company failed to credit a payment or miscalculated the amount owed, it could undermine their entire case.
Identifying Potential Legal Defenses
Every case is unique, but there are several common defenses we often employ in MCA lawsuits:
- Usury: While challenging due to the “purchase of receivables” structure, we may argue that the agreement is a disguised loan subject to usury laws.
- Unconscionability: We can argue that the terms of the agreement are so one-sided and unfair that they shouldn’t be enforced.
- Fraud or Misrepresentation: If the MCA company misled you about the terms or nature of the agreement, we may have grounds to void the contract.
- Violation of State Laws: We’ll examine whether the MCA company complied with all relevant Massachusetts laws, including the Consumer Credit Cost Disclosure Act.
- Improper Collection Practices: If the MCA company has engaged in harassment or other illegal collection tactics, we can use this to strengthen your position.
In 92 Palm Foods LLC v. Fundamental Capital LLC, a New York court examined claims of coercion, criminal usury, and unconscionability in an MCA agreement. While the court ultimately upheld the agreement, the case illustrates the importance of thoroughly examining all potential defenses.
Negotiating with Your Lender
Sometimes, the best defense is a good offense. We often find that MCA companies are willing to negotiate once they realize you have strong legal representation. Our goal is to reach a settlement that:
- Reduces the total amount owed
- Eliminates or reduces additional fees and interest
- Establishes a manageable repayment plan
We’ve successfully negotiated settlements that reduced balances by 30-70% and converted daily or weekly payments to more manageable monthly installments.
Preparing for Court Proceedings
If negotiation isn’t successful, we’ll prepare to defend you in court. This involves:
- Filing a comprehensive answer to the complaint, including any counterclaims
- Conducting thorough discovery to uncover any weaknesses in the MCA company’s case
- Preparing you for depositions and potential testimony
- Developing a compelling narrative that presents your side of the story
Remember, many MCA companies rely on default judgments. Simply showing up and mounting a defense can often lead to a more favorable outcome.
How We Can Help
At Delancey Street, we’re committed to helping Boston businesses fight back against predatory MCA practices. Our team of experienced attorneys understands the nuances of these cases and knows how to build effective defense strategies.
We offer:
- Free initial consultations to assess your case
- Aggressive representation in and out of court
- Expertise in negotiating favorable settlements
- A track record of success in MCA defense cases
Don’t face this challenge alone. Contact us today to learn how we can help protect your business and your future.
Remember, time is of the essence in these cases. The sooner you act, the more options you’ll have. Let’s work together to defend your business and secure your financial future.