If your New York business is struggling to pay back a merchant cash advance, is at risk of defaulting, or has already defaulted, then you need to contact an experienced merchant cash advance attorney who is familiar with the laws of your state.
The funding from a merchant cash advance may come quickly but it can also come at a high price. If your business is experiencing trouble paying back the advance that you accepted from a MCA broker, you may have already received calls from collection agents or threats of a merchant cash advance lawsuit.
In some cases, a lawsuit may already have been filed against you.
What many business owners facing possible default and certain pressure from their merchant cash advance lender or broker don’t realize is that professional legal help is available to help you save your business and protect your assets. You need the assistance of a qualified and experienced merchant cash advance attorney.
Recent Updates in New York Merchant Cash Advance Cases
For years, New York has been at the center of both the merchant cash advance lending industry and lawsuits related to MCA default. Most MCA brokers are based out of New York and file the vast majority of their breach of contract lawsuits in the state’s courts.
Fortunately for many merchant cash advance debtors, the federal government and many state governments have begun to take notice of how MCA brokers and lenders actually operate versus how they portray themselves as operating.
Although these “advances against future receivables” are not regulated federally, courts in New York have become very familiar with questions as to whether a merchant cash advance agreement is actually an unregulated loan.
Recently, one mechanism that brokers used to successfully win cases against their debtors has been mostly removed in New York by new state laws. Until August of 2019, MCA brokers were able to file confessions of judgment against both in-state and out-of-state debtors. By statute, New York courts no longer accept these documents for out-of-state residents.
In reality, a confession of judgment is a document which allows an MCA broker or lender to enter a judgment against the debtors without having to provide notice that a complaint has been filed and without a court hearing.
What this means is that a MCA or their attorney can file a confession of judgement against a borrower, bypass court hearings, and begin to directly seize the business owner’s assets before the business owner even realizes a judgment has been entered by the Court.
In addition to the changes to confessions of judgement, in June of 2020, the New York Office of the Attorney General and the Federal Trade Commission both filed lawsuits against two merchant cash advance companies in the Southern District of New York and in the New York County State Supreme Court.
The arguments and outcomes of these cases could indicate what future claims that federal and state regulators will bring against other MCA brokers in the future. It also indicates that regulation may soon be on the way for the merchant cash advance industry.
Do Confessions of Judgment Still Apply to Merchant Cash Advance Cases in New York?
Yes, confessions of judgement still apply to certain merchant cash advance lawsuits filed in the courts of New York state. New York has banned confessions of judgement from being filed in cases involving out-of-state debtors but still accepts them for in-state residents.
If you are a business owner in the state of New York and you have accepted an advance from a merchant cash advance company, you may have signed a confession of judgement as a part of your advance agreement. Your lender could file that confession and begin seizing your assets without notification that a suit has been filed.
How a Merchant Cash Advance Attorney Can Help You
The fact that New York’s courts will still accept confessions of judgement against in-state business owners is one of the reasons why it is so important that New York business owners struggling with MCA debt reach out to an experienced merchant cash advance attorney before it is too late.
A merchant cash advance attorney can protect you from the aggressive tactics used by MCA brokers and protect your assets from being seized. A merchant cash advance attorney will look at the structure of your agreement to determine if the advance was, in fact, an actual advance against future receivables or rather, an illegal usurious loan.
Depending on the particulars of your case, a New York merchant cash advance attorney may be able to reduce the payments on your advance, lower the interest rate, help you get into a forbearance program, or settle your MCA debt for substantially less than what you may owe.
Whether you have already defaulted, are at risk of defaulting, or are simply struggling under the high daily or weekly merchant cash advance repayment amounts, contacting a merchant cash advance attorney is the first step to getting your business back on track.
The attorneys at the Business Debt Law Group collectively have more than 60 years of experience in handling cases just like yours. We are also intimately familiar with the ways that New York courts deal with merchant cash advance cases. Contact us today for a free case review and to learn more about how one of our New York merchant cash advance attorneys can help you.