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.
Daily payments, high factor rates and other hallmarks of MCAs can become huge burdens on your business’ cash flow.
If your business is experiencing trouble paying back the money from an advance you accepted from an MCA broker, you may have already received calls from aggressive collection agents with threats of a merchant cash advance lawsuit being filed imminently.
What many business owners facing possible default and 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 from possible bankruptcy or closure and protect your personal assets.
You require the professional services of a qualified and experienced merchant cash advance lawyer.
Recent Updates in New York Merchant Cash Advance Cases
For many years, New York was 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 the majority of lenders still file breach of contract lawsuits against defaulting borrowers in New York State courts.
However, in recent years, with the elimination of Confession of Judgments for out-of-state defendants, our firm has seen many new lawsuits filed against business owners in Texas, Connecticut, Pennsylvania, Utah, and Virginia.
Although these “advances against future receivables” are not regulated federally, courts in New York have become very familiar with questions pertaining to whether a merchant cash advance could be considered illegally usurious and may actually be an unlawful loan.
Until August of 2019, MCA lenders were permitted to file confessions of judgment (COJ) against both in-state and out-of-state debtors.
By statute, New York courts no longer accept confessions of judgment for defendants outside of the state of New York. However, they are still permitted against borrowers whose businesses are domiciled in New York or where the personal guarantor is a resident of New York.
In addition to the changes to confessions of judgment laws, in June of 2020, the New York 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.
Those suits focused on the conduct of the lenders regarding the interactions with borrowers as opposed to simply the contract language contained in the merchant cash advance agreement. In part, does a lender’s conduct make the advance act more like a business loan?
Do Confessions of Judgment Still Apply to Merchant Cash Advance Cases in New York?
Yes as stated above, confessions of judgment still apply to certain merchant cash advance lawsuits filed in the courts of New York state.
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 judgment 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 judgment 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 to analyze the business owner’s risk, exposure and possible remedies before it is too late.
A merchant cash advance attorney can protect clients from the aggressive tactics used by merchant cash advance providers to protect your business from damaging attacks and to insulate your personal assets from being levied or seized.
A merchant cash advance attorney will look at the structure of your agreement and the lending party’s conduct to determine if your advance was a lawful advance against future receivables or, rather possibly, an illegal usurious loan.
Depending on the particulars of your case, a New York merchant cash advance attorney may be able to reduce the amount of payments of your advance, lower the total debt amount, and restructure the debt to make it generally much more affordable.
Whether you have already defaulted, are at risk of defaulting, or are simply struggling under the high daily or weekly merchant cash advance payment amounts, contacting an experienced merchant cash advance attorney is the first step to getting your business back on track.
The core team of attorneys at the Business Debt Law Group collectively possess more than 60 years of professional legal experience handling cases just like yours.
We are also intimately familiar with the ways that New York courts feel about merchant cash advance cases with courts varying their approach from county to county within the state of New York.
For example, a suit filed in Kings County may proceed quite differently from a suit filed in Ontario County. Please contact our specialized law firm today for a free case review and to learn more about how one of our New York merchant cash advance attorneys can help you during this difficult time.
