New Mexico Merchant Cash Advance Defense Lawyers
Merchant Cash Advances (MCAs) can be a lifeline for small businesses in New Mexico, providing quick access to much-needed capital. However, they often come with high fees, daily repayment schedules, and complex legal challenges. At Delancey Street, we specialize in defending business owners against the pitfalls of MCAs. Our experienced attorneys are here to help you navigate the legal landscape and protect your business. In this article, we’ll explore the ins and outs of MCAs, common legal issues, and how our team can assist you.
Understanding Merchant Cash Advances
Merchant Cash Advances are a form of alternative financing where a business receives a lump sum of cash in exchange for a percentage of future credit card sales. Unlike traditional loans, MCAs are not based on fixed repayment schedules but rather on the business’s daily credit card transactions. This can provide quick funding but also introduces several risks.
How MCAs Work
MCAs typically involve the following steps:
- Application and Approval: Businesses apply for an MCA by providing financial statements and credit card processing information.
- Advance and Agreement: Upon approval, the business receives a lump sum of cash. In return, the business agrees to repay the advance through a percentage of daily credit card sales.
- Repayment: Repayment continues until the advance, plus any fees, is fully repaid.
Pros and Cons
| Pros | Cons |
|---|---|
| Quick access to cash | High fees and interest rates |
| No need for collateral | Daily repayment can strain cash flow |
| Flexible approval criteria | Potential for debt cycles |
Common Legal Issues with MCAs
MCAs can lead to various legal challenges, especially if the terms are not clearly understood or if the business struggles with repayment. Here are some common issues:
Misleading Terms and Predatory Practices
Many business owners report being misled about the terms and conditions of their MCA agreements. High fees, confusing repayment schedules, and hidden clauses can trap businesses in a cycle of debt. In New Mexico, the lack of specific regulations on MCAs allows some lenders to engage in predatory practices.
Confessions of Judgment
A Confession of Judgment (COJ) is a legal document that waives a borrower’s right to a formal legal defense in the event of default. While New York banned COJs for out-of-state business owners in 2019, some MCA lenders have started filing COJs in other states like Texas and Illinois. In New Mexico, COJs can still pose significant risks to business owners.
UCC Liens
Uniform Commercial Code (UCC) liens allow MCA lenders to claim a business’s assets if it defaults on its advance. These liens can severely impact a business’s operations and reputation, as they may be sent to customers and payment processors, causing disruptions in cash flow and customer relationships.
Legal Defenses and Strategies
Navigating the legal complexities of MCAs requires experienced legal counsel. At Delancey Street, we offer several strategies to defend against MCA claims:
Reviewing and Negotiating Agreements
Before signing an MCA agreement, our attorneys can review the terms to identify any unfavorable clauses. We can negotiate with MCA providers to remove or alter predatory terms, ensuring a fairer deal for your business.
Defending Against Lawsuits
If an MCA lender files a lawsuit over non-payment, we can represent you in court. Our team will raise defenses such as violations of state usury laws or deceptive practices under New Mexico’s Unfair Practices Act.
Settling Debts
In cases where litigation is not the best option, we can negotiate settlements with MCA lenders. Our goal is to reduce the principal balance and secure more manageable repayment terms.
Filing for Bankruptcy
As a last resort, we can assist with filing for bankruptcy. This can discharge personal obligations under an MCA while protecting the business’s assets. We handle both personal and corporate bankruptcy filings, including Chapter 7, 11, and Sub-chapter V.
Case Studies and Client Stories
To illustrate our expertise, here are some anonymized client stories:
Case Study 1: Misleading Terms
A New Mexico restaurant owner was misled about the repayment terms of an MCA, leading to daily repayments that strained the business’s cash flow. Our attorneys reviewed the agreement, identified deceptive practices, and successfully negotiated a settlement that reduced the repayment amount and extended the repayment period.
Case Study 2: UCC Lien Dispute
A retail business faced a UCC lien that disrupted its operations and customer relationships. We challenged the lien in court, arguing that the MCA lender had violated state laws. The court ruled in favor of our client, removing the lien and restoring the business’s cash flow.
Why Choose Delancey Street
At Delancey Street, we understand the unique challenges that New Mexico business owners face with MCAs. Our team is dedicated to providing personalized legal solutions to protect your business. Here’s why you should choose us:
- Experience: Years of experience in MCA defense and debt relief.
- Expertise: In-depth knowledge of New Mexico laws and regulations.
- Compassion: We understand the stress and anxiety that come with financial challenges.
- Results: Proven track record of successful settlements and defenses.
Contact Us Today
If you’re struggling with an MCA or need legal advice, don’t hesitate to contact us. Our team is here to help you navigate the complexities of MCAs and protect your business. Call us today for a free consultation and take the first step towards financial relief. Ready to get started? Contact Delancey Street today and let us help you defend your business against the pitfalls of Merchant Cash Advances.