Maryland Merchant Cash Advance Defense Lawyers
If you’re a Maryland business owner caught in the web of a Merchant Cash Advance (MCA) agreement, you’re not alone. Many businesses have turned to MCAs for quick capital, only to find themselves struggling with exorbitant repayment terms and aggressive collection tactics. At Delancey Street, we understand the challenges you face and are here to help you navigate the complexities of MCA debt relief. Our experienced Maryland Merchant Cash Advance Defense Lawyers are dedicated to protecting your rights and helping you regain control of your financial future.
Understanding Merchant Cash Advances
A Merchant Cash Advance (MCA) is a form of financing where a company provides a business with an upfront lump sum of cash in exchange for a percentage of future credit card and debit card sales. Unlike traditional loans, MCAs do not have fixed monthly payments or set repayment periods. Instead, repayments are made automatically through daily deductions from the merchant’s credit card receipts.
Key Features of MCAs:
- Upfront Lump Sum: Businesses receive a lump sum payment, typically ranging from $5,000 to $500,000.
- Repayment Through Sales: The MCA company takes a fixed percentage of daily credit card sales until the advance is repaid.
- No Fixed Repayment Period: Repayment duration depends on the business’s sales volume.
While MCAs can provide quick access to capital, they often come with high costs. The equivalent annual percentage rate (APR) can exceed 200%, making them one of the most expensive financing options available.
The Pitfalls of Merchant Cash Advances
MCAs are largely unregulated, which has led to widespread predatory practices. Many MCA companies engage in deceptive tactics, such as misrepresenting repayment terms, charging excessive interest rates, and using aggressive collection methods.
Common Issues with MCAs:
- High Repayment Rates: The daily deductions can absorb a significant portion of a business’s revenue, leaving little for other expenses.
- Aggressive Collections: MCA companies often use harassing tactics and legal threats to collect payments.
- Confessions of Judgment: Many MCA contracts include clauses that allow the lender to seize assets without notice if the merchant defaults.
These practices can trap businesses in a cycle of debt, making it nearly impossible to break free without legal assistance.
Legal Strategies for MCA Debt Relief
If you’re overwhelmed by MCA debt, our Maryland Merchant Cash Advance Defense Lawyers can pursue multiple strategies to find a solution. We have extensive experience in negotiating settlements, defending against lawsuits, and challenging predatory lending practices.
Key Legal Strategies:
- Renegotiating the MCA Contract: We can negotiate with the MCA company to lower your payments to a more manageable amount, avoiding default or legal action.
- Unconscionability Claims: We can argue that the terms of the MCA contract are unlawfully unfair and one-sided, potentially leading to the contract being declared void.
- Usury Claims: By calculating the effective APR, we can sometimes prove that the implied interest rate exceeds Maryland’s usury cap, resulting in the contract being declared void.
- Breach of Contract: We carefully review the MCA agreement to identify any violations by the MCA provider, which can form the basis of a breach of contract claim.
Recent Legal Developments
The legal landscape surrounding MCAs is evolving, with increasing scrutiny from regulators and courts. For example, Maryland has introduced legislation aimed at regulating or even banning MCAs due to their predatory nature. Additionally, recent court decisions have invalidated MCA agreements for violating usury laws and improper use of confessions of judgment.
Notable Legal Cases:
- Georgia Bankruptcy Court Decision: The court ruled that an MCA agreement was a purchase of accounts receivable, not a loan, thereby avoiding criminal usury charges.
- New York Legislation: New York enacted a law prohibiting confessions of judgment in MCA agreements, providing significant relief for businesses.
Why Choose Delancey Street?
At Delancey Street, we have a proven track record of successfully defending Maryland businesses against predatory MCA practices. Our team of dedicated attorneys understands the intricacies of MCA agreements and is committed to providing personalized, aggressive representation.
Our Approach:
- Comprehensive Review: We thoroughly review your MCA agreement, payment history, and financial situation to identify potential defenses.
- Strategic Defense: We employ a combination of negotiation and litigation to achieve the best possible outcome for your case.
- Client-Centered: We prioritize clear communication and keep you informed throughout the legal process.
Contact Us Today
Don’t let predatory MCA lending practices jeopardize your business. Contact Delancey Street today for a free consultation with one of our experienced Maryland Merchant Cash Advance Defense Lawyers. We are here to help you navigate this challenging situation and find a path to financial stability.
Frequently Asked Questions
What is a Merchant Cash Advance (MCA)?A Merchant Cash Advance provides businesses with quick financing by purchasing a percentage of the company’s future credit card sales. The business receives an upfront lump sum and repays it as a fixed percentage of daily credit card receipts.
How much does a Merchant Cash Advance cost?
MCAs are very expensive compared to traditional small business loans. The equivalent APR often exceeds 100%, sometimes reaching over 200%. The total cost depends on the payback period.
Why are MCAs risky for borrowers?
Since MCAs are unregulated, some providers use predatory tactics like misrepresenting terms, charging excessively high rates, aggressive collections, and lawsuits. Many MCA contracts contain “confessions of judgment” allowing lenders to seize assets without notice.
How can a Maryland Merchant Cash Advance attorney help?
An experienced attorney can help renegotiate the MCA contract, challenge unfair terms, and defend against aggressive collection tactics. They can also pursue legal claims such as unconscionability, usury, and breach of contract. At Delancey Street, we are committed to fighting for your rights and helping you overcome the challenges posed by Merchant Cash Advances. Contact us today to learn more about how we can assist you.