Oregon Merchant Cash Advance Defense Lawyers
Running a small business is no small feat, and when cash flow gets tight, many business owners turn to merchant cash advances (MCAs) for quick access to capital. However, these financing agreements can quickly become a nightmare if you fall behind on payments. Aggressive debt collectors, confusing contract terms, and exorbitant fees can make it feel like you’re drowning in debt. That’s where we come in. At Delancey Street, we specialize in defending Oregon businesses against the pitfalls of merchant cash advances. Let’s dive into how our Oregon Merchant Cash Advance Defense Lawyers can help you navigate these treacherous waters.
Understanding Merchant Cash Advances
Merchant cash advances are a form of business financing where a company purchases a portion of your future credit card sales. You receive a lump sum payment upfront, and the MCA company takes a fixed percentage of your daily credit card receipts until the balance is repaid, plus fees and interest. Unlike traditional loans, there’s no set repayment schedule—the payback period depends on your sales volumes. This flexibility can be appealing, but it also means the costs can quickly spiral out of control if sales drop unexpectedly.
Common Legal Issues with MCAs
While MCAs provide fast access to working capital, they come with a minefield of potential legal problems:
- Excessively High Effective Interest Rates: Although MCA companies don’t charge “interest” per se, the fees and fixed daily payments can result in annualized rates exceeding 100-200% APR or more. These usurious rates may be illegal under Oregon laws against predatory lending.
- Aggressive Collections and Improper Debt Collection Practices: Many MCA providers resort to aggressive tactics like harassing phone calls, lawsuits, or even trying to garnish bank accounts when payments fall behind. They may violate consumer protection laws like the Fair Debt Collection Practices Act.
- Confusing and Deceptive Contract Terms: MCA contracts often contain confusing terminology and omit key details about the costs, repayment terms, and consequences of default. This can obscure the extreme risk some businesses take on.
- Personal Guarantees and Cross-Collateralization Clauses: Many MCA companies require a personal guarantee from the business owner, making them personally liable for the debt. Others include “cross-collateralization” clauses used to seize other assets or access personal bank accounts if the business defaults.
The Role of Merchant Cash Advance Defense Lawyers
If you’re struggling with MCA debt or facing an aggressive collections lawsuit, finding an experienced business attorney is critical. Our Oregon Merchant Cash Advance Defense Lawyers are well-versed in the intricacies of MCA agreements and can provide the legal support you need.
Key Services We Offer
- Contract Review and Assessment: We meticulously review your MCA contract to identify any provisions that may be unlawful or abusive. This includes calculating the true effective interest rate based on fees, payback amount, and term length.
- Negotiation and Settlement: Our attorneys have a successful track record of negotiating MCA-related disputes. Through negotiations, we may resolve lawsuits or debts for a fraction of the balance, saving your business while avoiding the risks of trial.
- Litigation and Defense: If the MCA company initiates aggressive collection efforts or legal action, we assert defenses on your behalf. This includes filing motions to dismiss, challenging the validity of the debt, and defending against any lawsuits.
- Compliance with Consumer Financial Protection Regulations: Navigating consumer finance laws and regulations like usury caps, debt collection practices, and disclosure requirements requires specialized legal knowledge. Our team is well-versed in Oregon’s consumer lending protections.
Case Studies and Hypothetical Scenarios
To illustrate the impact of our services, let’s consider a few hypothetical scenarios:
- Scenario 1: The Overwhelmed Restaurateur: Jane owns a small restaurant in Portland. She took out an MCA to renovate her kitchen but soon found herself struggling to keep up with the daily payments. The MCA company began making daily withdrawal attempts that overdraw her account, leading to bounced checks and additional fees. Jane contacted us, and we were able to negotiate a more manageable repayment plan, saving her business from financial ruin.
- Scenario 2: The Harassed Retailer: Bob runs a boutique in Eugene. After a slow season, he fell behind on his MCA payments. The MCA provider started harassing him with daily phone calls and even threatened legal action. We stepped in and filed a motion to dismiss the lawsuit, challenging the validity of the debt and the creditor’s paperwork. Bob was able to regain control of his business and focus on getting back on track.
Oregon Laws Related to Merchant Cash Advances
Oregon has usury laws that limit the maximum interest rates lenders can charge. However, MCA companies often try to avoid these laws by structuring their products as purchases of future receivables rather than loans. This legal gray area has allowed some companies to charge exceedingly high effective interest rates. The Oregon Department of Consumer and Business Services has issued alerts warning businesses about the risks of merchant cash advances, but oversight remains limited compared to regulations on consumer lending.
Finding the Right Attorney
If you’re an Oregon business owner concerned about an existing merchant cash advance agreement, it’s crucial to contact an attorney experienced with these types of financial products. Here are some tips for finding the right legal help:
- Search Oregon State Bar Directories: Look for attorneys experienced in financial services law, commercial litigation, and consumer protection.
- Research Lawyer Review Sites: Use sites like Avvo to check attorneys’ backgrounds and experience with MCA cases.
- Ask for Referrals: Speak with other local business owners for recommendations.
- Contact the Oregon State Bar Association: They can provide recommendations and verify the attorney’s credentials.
- Schedule Consultations: Meet with a few attorneys to discuss your specific situation. Consider those who offer free initial consultations.
Conclusion
Dealing with merchant cash advance legal troubles can be overwhelming for small business owners already stretched thin. But facing the aggressive collections tactics of MCA companies alone rarely ends well. If you’re struggling with a predatory contract, harassment from debt collectors, or an impending lawsuit, contact us at Delancey Street. With the right legal advice and representation protecting your interests, you can resolve MCA-related disputes and save your business. Don’t face these challenges alone—reach out to our experienced Oregon Merchant Cash Advance Defense Lawyers today.
Call to Action: Don’t let MCA debt ruin your business. Contact us now for a free consultation and let us help you get back on track.