Merchant Cash Advance Attorney Las Vegas – Help for Struggling Business Owners
Merchant cash advances (MCAs) have become an increasingly popular form of financing for small businesses and startups in recent years. Unlike traditional bank loans, MCAs provide fast access to capital without requiring strong credit or lengthy applications.But MCAs come with their own set of risks and drawbacks. The fees and payment structures can be excessive for companies without steady cash flow. Many businesses take out multiple MCAs and quickly find themselves caught in a debt trap.If you’re a Las Vegas business owner struggling with MCA debt, you may be wondering if you should hire a merchant cash advance attorney. Here’s what you need to know about MCA lawyers and how they can help.
What is a Merchant Cash Advance?
First, let’s quickly review what a merchant cash advance is.An MCA provides a lump sum of capital to a business in exchange for a percentage of future credit card sales. It’s not technically a loan – there’s no set repayment schedule or interest.Instead, the business agrees to pay back the advance through daily or weekly payments, which are automatically deducted as a percentage of credit card receipts.The total amount repaid can end up being much higher than the original advance. The “buy rate” or “factor rate” determines the total amount owed. This rate ranges from 1.10 to 1.50 in most cases.For example:
-- Advance amount: $100,000
- Factor rate: 1.40
- Total repayment amount: $140,000
Because there’s no fixed term, MCAs can be riskier than conventional loans. Payments fluctuate based on sales volume. And the total repayment can quickly spiral out of control.
Why Hire an MCA Attorney?
If you’ve fallen behind on MCA payments or been sued by a provider, a knowledgeable lawyer can help in several ways:
Negotiating Lower Payments
An attorney experienced with MCA debt can often negotiate reduced payments and more favorable terms. This may involve getting multiple MCA providers to agree to take lower amounts over longer periods.
Settling Debt
In some cases, an MCA lawyer can negotiate a lump sum settlement for a fraction of what you owe. This can save you from drawn-out legal battles and allow you to move forward.
-Defending Lawsuits
MCA providers are quick to sue for breach of contract at the first sign of late payments. An attorney can put up a strong defense to avoid judgments that could cripple your business.
Reversing Judgments
Many MCA contracts contain “confessions of judgment” that allow providers to obtain judgments without notice. A lawyer may be able to get these judgments vacated.
Bankruptcy Protection
Filing for bankruptcy can discharge MCA debt and stop collection activities. An attorney can advise if this is the best path forward for your situation.
UCC Lien Removal
MCA providers often secure their claim with a UCC lien on your assets. A lawyer can sometimes get these liens removed so you can obtain financing elsewhere.
Questions to Ask a Prospective MCA Attorney
If you decide to consult with a merchant cash advance attorney, here are some key questions to ask:
-- How much experience do you have specifically with MCA debt cases? You want someone well-versed in the intricacies of these transactions.
- What strategies do you use to reduce MCA payments for clients? Get details on their process for negotiating settlements.
- How quickly can you engage with my MCA providers? Time is often critical when facing collections or lawsuits.
- What are your fees and how are they structured? MCA lawyers typically work on a contingency fee basis.
- Can you provide references from past MCA clients? Speaking with former clients can give insight into what it’s like to work with the attorney.
- Are you licensed to practice law in Nevada? You want someone familiar with Nevada laws and courts.
- What is your success rate settling MCA debt? Gauge their track record negotiating payoff amounts.
- How long have you been in business? More experienced firms tend to get better results.
- Can you make my MCA payments if needed while we work towards settlement? Some lawyers will make payments on your behalf to provide immediate relief.
4 Options for Resolving MCA Debt
If you decide to hire an attorney, make sure you understand the potential outcomes they can achieve. Here are 4 common resolution strategies MCA lawyers utilize:
1. Lump Sum Settlement
The ideal scenario is negotiating a lump sum payoff amount that’s less than you owe. This settlement agreement ends the contract and gets the MCA provider out of your business for good.
2. Payment Reduction
If a lump sum isn’t feasible, an attorney can often get payments lowered substantially and spread out over a longer term. This provides cash flow relief.
-3. Bankruptcy
Filing for Chapter 7 or Chapter 11 bankruptcy can eliminate MCA debt entirely. But it also impacts your business’s credit and ability to get financing.
4. Litigation Defense
Your lawyer can put up a vigorous defense if sued and try to get the case dismissed. They may also file countersuits claiming misconduct.The right option depends on your specific situation. An experienced MCA attorney will explain how they can best help resolve your debt.
Finding the Best MCA Lawyer in Las Vegas
There are a few important things to look for when researching MCA attorneys in the Las Vegas area:
- Specialization in MCA debt. You want someone who focuses specifically on these types of cases.
- Member of the Commercial Law League of America. This trade association provides resources and training for lawyers handling business debt issues.
- Licensed to practice law in Nevada. Local knowledge of state laws and courts is key.
- Member of the State Bar of Nevada. This ensures an attorney is properly accredited and in good standing.
- Ten or more years of experience. Look for an established law firm with a long track record.
- Positive online reviews. Feedback from past clients provides helpful insight.
- Provides free consultations. This gives you the chance to vet multiple lawyers before deciding.
- Reasonable fee structure. Avoid firms that demand large upfront retainers before doing any work.
Finding the right attorney to assist with your MCA debt takes research. But it’s a prudent investment that can save your business. Be sure to act quickly once you have decided on representation.
Alternatives to Hiring an MCA Attorney
While legal help is usually advisable, some business owners try to resolve MCA debt on their own or through other means. Here are a few options along with pros and cons:
Debt Settlement Companies
Debt settlement firms claim they can negotiate reductions in what you owe. But results vary wildly and their fees can be exorbitant. Most are not equipped to handle lawsuits.
Credit Counseling
Non-profit credit counseling provides guidance on managing debt. But they have little experience with complex MCA transactions. Negotiating settlements is not their focus.
Bankruptcy Without Attorney
Filing bankruptcy personally is easier than doing so for a business. Still, the process is convoluted and support from a lawyer is recommended.
Communicating Directly With MCA Provider
You can try calling your MCA provider directly to ask for reduced payments or restructured terms. But their incentive is to collect the full amount owed.Unless you have legal training, taking on MCA debt yourself is risky. The contracts are complex and providers will aggressively pursue repayment. Talk to an attorney before deciding what to do.
What to Do After Hiring an MCA Attorney
Once you’ve hired a merchant cash advance lawyer, here are some things you can expect as they start working on your case:
- Stop communications with MCA provider – Let your attorney handle all correspondence going forward.
- Provide requested documents – This may include your MCA contract, bank statements, tax returns and financial records.
- Review options – Your lawyer will explain the pros and cons of different resolution strategies based on your situation.
- Sign engagement letter – This outlines the attorney’s responsibilities and fees for representing you.
- Discuss bankruptcy – If appropriate, your lawyer can advise you on bankruptcy proceedings.
- Review settlement offers – Don’t accept any proposed settlements without your attorney’s review.
- Be patient – It takes time for attorneys to negotiate the best possible outcome. Trust their expertise.
- Stay focused on your business – Let your lawyer handle the MCA debt so you can focus on operations.
With an experienced attorney in your corner, you can rest easier knowing your legal rights are protected while they work to resolve your MCA debt.
The Bottom Line
Dealing with mounting MCA debt is stressful for any business owner. Missed payments and lawsuits can quickly spiral out of control if you don’t take action.Hiring a knowledgeable MCA attorney in Las Vegas evens the playing field when negotiating with providers. They have the experience to get your payments reduced or debt eliminated.Acting quickly is key – the longer you wait, the fewer options you may have. Meet with a qualified lawyer for a free consultation and discuss your situation. With the right legal guidance, you can move forward with confidence.