Philadelphia Merchant Cash Advance Defense Lawyers
Introduction
Running a small business in Philadelphia can be a rollercoaster ride. One moment, you’re riding high on profits, and the next, you’re scrambling for cash flow. Many business owners turn to merchant cash advances (MCAs) to bridge the gap. But what happens when this financial lifeline turns into a financial noose? That’s where we come in. At Delancey Street, we understand the intricacies and pitfalls of MCAs, and we’re here to help you navigate through the stormy waters of MCA litigation.
What is a Merchant Cash Advance?
A merchant cash advance is a type of financing where a business sells a portion of its future credit card sales in exchange for immediate cash. Unlike traditional loans, MCAs are repaid through a percentage of daily credit card transactions, often ranging from 15% to 35%. This may sound like a convenient solution, but the devil is in the details. MCAs are not subject to usury laws, meaning the effective annual percentage rate (APR) can skyrocket to over 400%.
Table: Key Differences Between MCAs and Traditional Loans
| Feature | Merchant Cash Advance (MCA) | Traditional Loan |
|---|---|---|
| Repayment Method | Percentage of daily sales | Fixed monthly payments |
| Interest Rate | Not regulated, can exceed 400% | Regulated, typically lower |
| Usury Laws | Not applicable | Applicable |
| Collateral Requirement | Generally no collateral required | Often requires collateral |
| Approval Speed | Fast, often within days | Slower, can take weeks or months |
Why MCAs Can Lead to Lawsuits
While MCAs offer quick cash, their repayment terms can quickly become unmanageable. If your business experiences a downturn, you might not have enough daily sales to cover the MCA withdrawals, leading to default. Once you default, MCA companies can take aggressive actions to recoup their investment, including:
- Filing a lawsuit against your business
- Obtaining a confession of judgment
- Freezing your bank accounts
- Placing a lien on your assets
Many MCA agreements require you to waive your right to a trial and allow a confession of judgment if you default. This means the lender can seize your assets without even going to court.
Responding to an MCA Lawsuit
If you’ve been served with a merchant cash advance lawsuit, don’t panic. Here are some steps you can take:
- Retain Legal Counsel Immediately: An experienced Philadelphia MCA attorney can review your case and build a strategic defense to protect your interests.
- File a Motion to Vacate the Confession of Judgment: If you signed a confession of judgment, your lawyer might file a motion to vacate it, arguing that the terms were unfair or that you were coerced into signing.
- Challenge the Validity of the MCA Agreement: Your attorney can scrutinize the MCA contract for any loopholes or violations of state laws.
- Negotiate a Settlement: Sometimes, negotiating a settlement can be the best course of action to reduce the debt or extend the repayment terms.
Choosing a Qualified Merchant Cash Advance Attorney
Not all lawyers are created equal, especially when it comes to MCA litigation. Here’s what to look for in a qualified MCA attorney:
- In-depth knowledge of MCA lending practices
- Understanding of MCA contract loopholes
- Record of favorable settlements and judgments
- Litigation experience in Philadelphia courts
- Membership in relevant legal associations
Hypothetical Scenario
Imagine you’re a small restaurant owner in Philadelphia. Business was booming until a sudden economic downturn hit. You took out an MCA to keep your doors open, but now, daily repayments are bleeding you dry. You’ve defaulted, and the MCA company has frozen your bank accounts. What do you do? You contact us at Delancey Street. We’ll review your case, challenge the validity of the MCA agreement, and work to get your accounts unfrozen and your debt reduced.
Act Now to Protect Your Business
If you’ve been sued for defaulting on a merchant cash advance, don’t delay in seeking legal representation. A knowledgeable Philadelphia MCA attorney can often get lawsuits dismissed, debts reduced or eliminated, and save your business from financial ruin. Don’t go it alone against aggressive MCA collectors. Call us today to discuss your best options.
Conclusion
Merchant cash advances can be a double-edged sword. While they provide quick access to cash, they can also lead to crippling debt and aggressive legal actions. At Delancey Street, we specialize in defending businesses against MCA lawsuits. With our expertise, we can help you navigate the complexities of MCA litigation and protect your business from financial disaster. Contact us today for a consultation and take the first step towards reclaiming control of your business.
Call to Action: Have you been served with an MCA lawsuit? Don’t wait! Contact Delancey Street today for a free consultation. Let us help you protect your business and your future. Note: This article is for informational purposes only and does not constitute legal advice. For specific legal advice, please consult with a qualified attorney.
Legal Citations and References
- Tender Loving Care Homes Inc. v. Reliable Fast Cash, LLC, 172 N.Y.S.3d 335, 335–42 (N.Y. Sup. Ct. 2022)
- K9 Bytes, Inc. v. Arch Capital Funding, LLC, Supreme Court of Westchester County, New York
- Federal Trade Commission v. RAM Capital Funding, LLC, and Tzvi Reich