How to Get Out of a Merchant Cash Advance
When your merchant cash advance payments become unaffordable and you feel that you may not be able to continue with your scheduled payments, what should you do?
Request a Forbearance
The first thing is to contact your merchant cash advance lender. Advise them of your current situation and ask them how they may be able to help you. The lender may be willing to offer what is referred to as a forbearance. That may allow you a month or two of no payments to help you to catch up on your business finances.
Possibly, the lender may also be willing to lower your payments for an agreed period of time. You have nothing to lose by asking the MCA lender to lower your payments. You may also offer a discounted total payoff amount, if you have access to the cash to pay off the debt in an amount near the principal balance owed at that time.
Additionally, you may want to look over your contract for a reconciliation clause. If your contract has a reconciliation clause, you can request a “look back” from your lender which means they will look at your cashflow and revenue to see if a readjustment or change to your repayment schedule is an option for you.
You have nothing to lose asking for help.
Although some merchant cash advance lenders may help you, the vast majority of the lenders generally will not modify the terms of repayment to assist you.
Speak with Your Accountant or Bookkeeper
If it turns out that you are unsuccessful in convincing the lender to agree to lower your payments or to give you a temporary forbearance from payments or possibly, extending your repayment terms or, allowing a short payoff, the next critical step for a business owner is to sit down with their accounting or bookkeeping person.
If no deal can be cut to provide relief from the MCA lender directly, the business debtor should turn to the person that they rely upon to handle their company financial record keeping and take a long hard look at the company’s current revenue, its payroll obligations, its overall overhead and its ability to service its existing debts.
If the financial numbers show that the Company cannot continue to service its MCA debt payments without having to cut payroll, liquidate assets or possibly even close up shop, it is probably time to talk with a legal professional about the ramifications of becoming delinquent on the repayment of your MCA debt.
Negotiate a Debt Settlement with the Help of a Merchant Cash Advance Attorney
All debt, including MCA debt can be settled at a discount. Regular credit card debt, mortgage debt, equity line debt, line of credit debt, equipment finance debt, and MCA debt etc., all can be settled at significant discounts, if handled properly.
Debt Settlements and Bankruptcy
The best help to guide you through the potential minefield of commercial debt delinquency and eventual discounted payoff settlements are seasoned legal professionals who practice law regularly in the creditor and debtor legal world.
Of course, if it is determined that settlements cannot be afforded after detailed consultation with an experienced professional, bankruptcy is always an option. The attorneys at the Business Debt Law Group have a great deal of experience as bankruptcy attorneys and we are always willing to discuss this option with all of our clients.
Bankruptcy is never the first choice but after consultation with our legal professionals, it may come to light that it is the right choice. Our lawyers always endeavor to help our clients to avoid bankruptcy but if it makes sense for any given client considering their financial circumstances, we will advise that client accordingly.
Assemble Your Financial Records
The next critical step in helping any MCA borrower who may need to become delinquent, is for that borrower to assemble all of their financial records, both business and personal to share those records and discuss with their attorney.
It is critical that your attorney receives a list of all of your bank accounts, both for the business and the personal guarantor in their name, a list of any and all business assets, merchant processing accounts, payroll, accounts as well as key customers, brokers and vendors of the business.
Asset Protection Plans
Your attorney will use this information to possibly design an asset protection plan for you in order to protect you and your business from judgment, levy, attachment and/or garnishment.
The most critical and pressing matter is to ensure that the MCA borrower can continue to operate their business and maintain healthy bank relationships while the MCA borrower is exposed to the legal process carried out by the lawyers for the MCA lenders.
Once the MCA borrower becomes delinquent with their MCA debt payments, the lenders will take action. You must be prepared for that action.
What if I Have a Pending Lawsuit Against Me?
If you have a pending lawsuit ongoing, you must also assemble any documentation regarding the lawsuit you are facing and provide that information to your attorney.
Once you are served, depending on where you live in relation to where the court case was filed, you will have 20 or 30 days to answer the lawsuit. If the lawsuit is not answered or responded to timely, you may have an automatic default judgment entered against you individually and your business enterprise.
Without question, the best option if you are struggling with your merchant cash advance payments is to hire a qualified and experienced merchant cash advance attorney.
Merchant cash advance attorneys have many programs and strategies that will be able to help with your current crisis. Programs may be able to lower your payments and save you thousands of dollars if not tens of thousands of dollars.
The initial analysis and consultation with our lawyers and support team is always a complimentary service.
What Happens After I Contact an Attorney?
Merchant cash advance attorneys are very strategic in their approach to work with your merchant cash advance lenders. Once enrolled with a qualified law firm, your lawyers will take over all future communications with your MCA lender.
You can direct all phone and email communications to your assigned attorney. Your time is better spent focusing on getting your business back on track.
Throughout the court process it is very important for you to document any and all collection calls, texts or emails you may be receiving from the MCA lenders, their attorney or collection agents and forward any collection communications to your lawyer. During this process it is also important that you let your attorney handle all of the communications with your lender.
Merchant Cash Advance Settlement
Once your Business Debt Law Group attorney feels comfortable that your personal assets, banking relationships, merchant processing accounts, payroll accounts and your business assets are well insulated from judgment and levy, the attorney will then prepare an initial good faith settlement letter which will describe your difficult situation and propose affordable terms for possible settlement.
The settlement letter provides the MCA lender with an understanding of your current financial circumstances. This information will assist the MCA collectors or their attorneys to understand that you did not default on your payments by choice.
The initial settlement also will provide the MCA lender with a realistic picture of your ability to pay back the alleged amount due.
Once the creditor understands that you did not default by choice and that your company does not have the financial ability to pay back the amount due; then a framework will have been established as the foundation of a future discounted settlement resolution.
Of course, our clients always have the final approval on all proposed settlement agreements and our clients are never under any obligation to accept a settlement offer with which they may not be entirely comfortable.
Unlike many of our competitors we DO NOT require you to put money in an escrow account or to forward the settlement payment directly to our company.
We certainly will hold escrow for our clients in our attorney escrow account if the client wishes to utilize this value-added service provided by our firm but our clients are not required or obligated to escrow settlement funds with our firm.
If your business cannot continue to service your MCA debt payments, the first step is to call the lender and try to work out a new more affordable repayment schedule.
If that fails, begin to gather and review all of your financial data by working closely with your accounting professional.
If it is determined that you can no longer service the debt, immediately consult with a qualified attorney like the attorneys of the Business Debt Law Group. All initial client consultations are free.
If you choose to retain the Business Debt Law Group, we will immediately engage with your MCA lenders to draw their attention away from you and onto our law firm. We will formulate and deploy a protection plan to insulate you and your business from collection.
Further we shall defend the legal actions that the MCA lender(s) may have filed against you and your business. During the process of protecting you and your business and defending you from judgment and collection efforts, we shall be negotiating in good faith with your MCA lender to secure sensible and affordable MCA debt settlement resolutions for you and your business.
The asset protection work, legal defense, and good faith negotiation undertaken by our attorneys works to resolve your MCA debts once and for all. We will be successful in resolving your MCA debts if you, the client, follow our legal advice and guidance throughout the term of the process.
It may take many months or even a year or more to bring about final resolution of your MCA debts, but the Business Debt Law Group attorneys will achieve the results you are seeking if you stay committed to the advice and guidance of your lawyer and the strategic defense and settlement program he or she designs specifically for you and your business.
Our team of legal professionals are here to help you.