Los Angeles Merchant Cash Advance Defense Lawyers
Are you a small business owner in Los Angeles struggling with an oppressive merchant cash advance (MCA)? You’re not alone. Many LA entrepreneurs have fallen victim to predatory MCA lenders offering quick cash but trapping them in a cycle of debt. But there’s hope! Our experienced Los Angeles merchant cash advance defense lawyers at Delancey Street are here to fight for your rights and help you break free.
What is a Merchant Cash Advance?
Before we dive into the legal defenses, let’s break down what exactly a merchant cash advance is:A merchant cash advance is NOT a traditional loan. Instead, it’s an agreement where a company purchases a portion of your future credit card sales in exchange for providing you with upfront cash. The MCA provider then collects a percentage of your daily credit card receipts until the advance is repaid, plus their hefty fees.Sounds simple enough, right? WRONG! These agreements often come with sky-high effective interest rates that can exceed 200% APR. Plus, the daily repayments can quickly drain your cash flow and leave your business struggling to stay afloat.
The Dangers of Merchant Cash Advances
Here’s why MCAs can be so risky for LA small businesses:
- Exorbitant costs: The fees and effective interest rates are often astronomical compared to traditional business loans.
- Daily repayments: Having a chunk of your credit card sales taken EVERY SINGLE DAY can cripple your cash flow.
- Confusing contracts: MCA agreements are often filled with complex legal jargon designed to confuse borrowers.
- Lack of regulation: MCAs fall into a legal gray area, allowing some providers to use aggressive collection tactics.
- Personal guarantee: Many MCAs require a personal guarantee, putting your personal assets at risk.
Does this sound familiar? If you’re drowning in MCA debt, don’t despair! Our Los Angeles merchant cash advance defense attorneys have the expertise to help you fight back.
Legal Defenses Against Merchant Cash Advances in California
Now, let’s get into the nitty-gritty of how we can defend you against predatory MCA lenders. Here are some of the key legal strategies we employ:
1. Usury Law Violations
California has strict usury laws that cap interest rates on loans. While MCA providers argue their products aren’t loans, we’ve successfully challenged this classification in court.Case law example: In People v. Jackson, 2019 Cal. App. Unpub. LEXIS 1324, a California appellate court found that certain MCA agreements could be considered loans subject to usury laws.We’ll analyze your specific agreement to determine if it violates California’s usury statutes. If so, we may be able to void the entire contract or significantly reduce what you owe.
2. Unconscionability
Many MCA agreements contain terms that are so one-sided and unfair that they’re considered “unconscionable” under California law. We’ll scrutinize your contract for provisions that:
- Impose unreasonable fees or penalties
- Allow for unilateral changes to terms
- Waive important legal rights
If we can prove unconscionability, a court may refuse to enforce the entire agreement or strike out the unfair provisions.
3. Fraud and Misrepresentation
Did the MCA provider mislead you about the terms of the agreement? Common fraudulent practices include:
- Misrepresenting the true cost of the advance
- Failing to disclose important terms
- Making false promises about refinancing options
If we can prove fraud or material misrepresentation, we may be able to rescind the contract entirely.
4. Violations of California’s Unfair Competition Law (UCL)
California’s UCL (Bus. & Prof. Code § 17200) prohibits “unfair, deceptive, untrue or misleading advertising” and other unfair business practices. We’ve successfully used this law to challenge MCA providers engaging in predatory tactics.Real-world example: We recently represented a Los Angeles restaurant owner who was bombarded with misleading marketing materials from an MCA provider. By demonstrating violations of the UCL, we negotiated a settlement that reduced our client’s debt by over 60%.
5. Improper Collection Practices
Some MCA providers use aggressive and illegal collection tactics when businesses fall behind on payments. We’ll investigate whether the lender has violated:
- The Fair Debt Collection Practices Act (FDCPA)
- California’s Rosenthal Fair Debt Collection Practices Act
- Other state and federal consumer protection laws
If we find violations, we can use them as leverage in negotiations or as the basis for a countersuit.
How Our Los Angeles MCA Defense Attorneys Can Help
When you work with Delancey Street, we’ll put our years of experience and deep knowledge of California business law to work for you. Here’s what we offer:
- FREE initial consultation: We’ll review your MCA agreement and assess your legal options at no cost.
- Thorough case analysis: Our team will dig deep into the details of your situation, uncovering every possible defense.
- Aggressive negotiation: We’ll work tirelessly to negotiate a favorable settlement with the MCA provider, potentially reducing your debt or securing better repayment terms.
- Litigation when necessary: If a fair settlement can’t be reached, we’re prepared to take your case to court and fight for your rights before a judge.
- Holistic business advice: Beyond just dealing with the MCA issue, we’ll provide guidance on improving your overall financial situation and avoiding similar problems in the future.
Don’t wait until it’s too late! The sooner you reach out to our Los Angeles merchant cash advance defense lawyers, the more options we’ll have to help you.
Common Questions About Merchant Cash Advance Defense in Los Angeles
Still have questions? Here are some FAQs we often hear from LA business owners:Q: Can I just stop paying my merchant cash advance?A: While it may be tempting, simply stopping payments is NOT recommended. This can lead to lawsuits, damage to your credit, and aggressive collection tactics. It’s CRUCIAL to consult with an attorney before taking any drastic actions.Q: The MCA provider is threatening to freeze my bank account. Can they do that?A: In some cases, MCA agreements include provisions allowing providers to access your bank account or place a UCC lien on your assets. However, these actions may not always be legal. Our attorneys can review your specific situation and help protect your assets.Q: I signed a personal guarantee. Am I personally liable for the MCA debt?A: Personal guarantees are common in MCA agreements, but that doesn’t mean they’re always enforceable. We’ll examine the specifics of your guarantee and explore options to limit your personal liability.Q: Can I file for bankruptcy to get rid of my MCA debt?A: Bankruptcy may be an option in some cases, but it’s not always the best solution. MCA debt can be complicated in bankruptcy proceedings. We’ll help you understand all your options and determine the best path forward for your unique situation.Q: How much will it cost to hire a merchant cash advance defense lawyer in Los Angeles?A: At Delancey Street, we understand you’re already facing financial stress. That’s why we offer flexible fee arrangements, including contingency options in some cases. We’ll discuss all the details during your free initial consultation.
Real-World Success Stories: How We’ve Helped LA Business Owners
Don’t just take our word for it! Here are a few examples of how we’ve helped Los Angeles entrepreneurs escape the MCA debt trap:
Case Study 1: The Struggling Restaurant
Client: Family-owned Italian restaurant in downtown LA
Problem: $150,000 in MCA debt across three providers, daily payments draining cash flow
Our solution: Negotiated settlements with two providers, reducing total debt by 40%. Filed a successful lawsuit against the third provider for UCL violations, resulting in debt forgiveness.
Outcome: Restaurant able to stabilize finances and remain in business
Case Study 2: The Tech Startup
Client: Early-stage software company in Silicon Beach
Problem: $300,000 MCA with predatory terms, including a 250% effective APR
Our solution: Challenged the agreement’s classification as a “purchase” rather than a loan. Proved usury law violations in court.
Outcome: Judge voided the agreement. Client only required to repay the principal amount borrowed.
Case Study 3: The Retail Shop Owner
Client: Boutique clothing store in West Hollywood
Problem: Multiple MCAs totaling $80,000, aggressive collection tactics including threats to seize inventory
Our solution: Proved violations of debt collection laws, negotiated settlements with all providers
Outcome: Total debt reduced by 55%, manageable repayment plan established
Why Choose Delancey Street for Your MCA Defense?
When you’re facing the stress of overwhelming MCA debt, you need a legal team you can trust. Here’s why Los Angeles business owners choose Delancey Street:
- Unmatched experience: We’ve handled hundreds of MCA cases and know all the tricks lenders use.
- Proven track record: Our success stories speak for themselves. We’ve saved LA businesses millions in unfair MCA debt.
- Personalized attention: You’re not just a case number to us. We’ll take the time to understand your unique situation and craft a tailored defense strategy.
- Aggressive advocacy: We’re not afraid to stand up to big MCA providers and fight for your rights.
- Comprehensive approach: We don’t just address the immediate MCA problem – we help set your business up for long-term financial success.
Take Action Now: Contact Our Los Angeles MCA Defense Lawyers
Don’t let predatory merchant cash advances destroy the business you’ve worked so hard to build. Our experienced Los Angeles merchant cash advance defense attorneys are ready to fight for you.