Merchant Cash Advance Restructure
Have you taken out a merchant cash advance that you can no longer afford or have already defaulted upon? Is your business struggling with debt, and you are looking for a way out?
In this article, we will discuss what happens when a merchant cash advance is defaulted, your options for restructuring a merchant cash advance to possibly avoid default, and your general options for dealing with your merchant cash advance debt problems.
What Happens if You Default on a Merchant Cash Advance?
If you default on your merchant cash advance, there will likely be a lawsuit filed soon thereafter. Your merchant cash advance lender will pursue a money judgment against you and your business through the use of a breach of contract lawsuit.
You will be served with a summons and complaint that will require a response to the lawsuit within either 20 or 30 days, depending on the jurisdiction of the legal action and whether you and your business are inside or outside of the State where the lawsuit has been filed.
It is imperative that a response is filed on your behalf within the specified time period.
If no response is filed on your behalf within the specified time period, a default judgment could be entered against you and your business almost immediately after the time period to respond has expired.
If a judgment is entered, you have now lost the ability to challenge the alleged debt owed or defend the lawsuit.
Once a judgment has been entered against you and your business, the MCA lender, now possessing the judgment against you, can attempt to seize your assets, levy your bank accounts, and garnish your wages.
When a merchant cash advance debt has been defaulted on, lenders will also attempt to freeze personal and business banking accounts through UCC lien demand disruption or a temporary injunction restraining order, as well as possibly contacting your vendors, brokers, customers, and credit card processors to assert that the lender’s UCC lien is enforceable against your future receivables.
For example, your customer or credit card processor could possibly pay your lender your owed receivables as opposed to paying you.
If you are using a Payroll company to pay your employees, the MCA lenders may also attempt to interfere with your payroll company relationship via UCC lien demand. This can completely cripple your business if you are not prepared.
What Are Your Options When Trying to Restructure Your Merchant Cash Advance?
Prior to any lawsuit being filed, you should be asking yourself, “How can I restructure my merchant cash advances to avoid defaulting on my debt payments?”
Look Into Cutting Costs
Before looking to restructure your advances, you need to look closely at your business. It is much easier to analyze and restructure internally, if you can, as opposed to litigating with your MCA lenders.
- Are there areas where costs could be trimmed?
- What unnecessary monthly expenses can be removed?
- Are you able to rent equipment instead of purchasing equipment?
- Are you able to outsource any work overseas to reduce labor costs?
- Can you replace expensive phone systems with cheaper VOIP systems?
Research Alternate Financing Options for Better Terms
Next, you need to research what alternative financing options may be available to you.
Your primary goal is to obtain better terms than the current merchant cash advance terms you may not be able to continue to service.
There are companies that specialize in consolidating merchant cash advance loans over a much longer term than standard merchant cash advances. Although the interest rates are still far above what would be considered legal in most states (if it was a traditional loan), it may still help you to lower your daily payments.
There are other funding options to research as well. You can see if you qualify for an SBA loan, which usually have very fair rates and terms. You can try to find a factoring company to use in place of your merchant cash advances.
Negotiate with Your Vendors, Suppliers, or Brokers
How is your relationship with your suppliers, vendors, and brokers (if your business uses brokers)?
You might consider contacting your vendors and suppliers or brokers and try to renegotiate new terms. You may be able to renegotiate to help lower your operating costs, which would assist in lowering your payments.
Once you have exhausted all means of attempting to lower your operating costs and you still are not able to comfortably afford your merchant cash advance payments, you should consider retaining a qualified law firm to help you restructure your merchant cash advance debt.
Merchant Cash Advance Consolidation
A merchant cash advance consolidation is no different from a personal loan consolidation. All of your merchant cash advances will be paid off with one loan.
Theoretically, these consolidations should either lower the interest rates or extend the terms, thereby lowering your daily, weekly, or monthly payments.
Unfortunately, with many administration fees and other unexpected and/or hidden fees, many times these consolidations, while appearing to help, may inevitably leave you with the same or similar financial position that you were in before the consolidation. There are many other avenues to consider before restructuring with a consolidation.
Reverse Consolidations
Reverse consolidations are a method to slowly help ease your cash crunch burden. A reverse consolidation lender will loan you the money to cover your daily merchant cash advance payments.
You would then make a payment to the reverse consolidation company, that is, on average, 20-25% less than what you would normally pay to your merchant cash advance lenders (freeing up your cash flow). This will remain in effect until your merchant cash advances are paid in full.
Merchant Cash Advance Settlement
Merchant cash advance settlement is a process by which your debt is negotiated to repay less than what you contractually owe to your creditors.
If handled correctly by a qualified professional, settlement negotiations can be very successful. What is most important to be aware of is that when you default on a merchant cash advance, a lawsuit will most likely be filed against you.
If the organization that is working on your merchant cash advance settlement negotiations is not a law firm, you should terminate that relationship and instead find an experienced law firm to assist you. Non-law firms that handle debt negotiation generally will not have an attorney on staff to defend potential lawsuits.
On a daily basis, we hear from clients who have signed up with a debt settlement or consolidation company (not a law firm) who told them to avoid speaking with their creditors but basically took no other action on the borrower’s behalf. This is a huge mistake.
The borrower then falls behind on their advances, avoids all calls as they have been advised by the non-lawyer to do, and sure enough, a lawsuit is filed against their business and also against them personally.
That lawsuit then needs to be responded to by a lawyer. However, the debt settlement or debt consolidation group does not have any lawyers because it is not a law firm, and now the borrower must locate and hire a suitable law firm, which is exactly what should have been done in the first place.
Businesses cannot represent themselves in U.S. Courts. While individual people can represent themselves in the Courts, what is called “pro se,” business entities legally must be represented by a lawyer if they intend to fight the lawsuit.
Contact a Business Debt Law Group Attorney
At Business Debt Law Group, we have combined over 60 years of experience mitigating and settling debt matters. Business Debt Law Group specializes in restructuring merchant cash advance debts. Our team has saved our clients, collectively, millions of dollars by restructuring existing debts.
Not only will we assist in restructuring your merchant cash advances, but we will also fully represent you in any lawsuits filed against your business.
How Merchant Cash Advance Relief Works
Once your retainer is signed with our law firm, you and your business will be represented by an attorney who specializes in negotiating and litigating with merchant cash advance lenders.
Your court cases and any confession of judgments (if such exist) will be legally responded to in the necessary courts. Your lenders will be notified that you have retained legal counsel, and all future correspondence should be communicated through the law firm.
You will be advised on how to best protect your business and personal assets.
Your legal fees will be a set flat fee. You will not be charged by the hour as many law firms would customarily do. This enables you to talk to your attorney and have as much work done as is needed without worrying about paying by the hour.
We will structure a plan to cover your legal fees and allow for your business to accumulate funds necessary for settlements as they are negotiated with the lenders (if you so elect to escrow for settlement). This process will allow you to operate your business and have peace of mind while the law firm engages your lenders in the courts and stays in regular communication with your lenders, working diligently to establish affordable settlement arrangements.
Get MCA Debt Relief Starting Today
Past performance does not guarantee future results, but we can share with you many settlement agreements our firm has obtained for other clients.
We have been able to get lawsuits dismissed, judgments vacated or satisfied, levied bank accounts released, garnished wages returned, and receivables recovered from frozen status resulting from MCA lender UCC lien notice interference.
Our lawyers will provide comprehensive legal support, including the noted defense of lawsuits and good faith but hard-nosed negotiations with your lenders. Our lawyers are ready and willing to skillfully speak with your customers, vendors, suppliers, and/or brokers as may be needed if those customers, vendors, suppliers, or brokers receive letters from your lenders attempting to get them to stop doing all business with your company.
Those critical communications with your lifeblood business relationships involve a dialogue with those parties’ legal departments or in-house attorneys so that you are able to continue to operate your business without your valuable business relationships being disrupted by the aggressive collection tactics of your MCA lenders and most importantly, while your MCA debt matters are being addressed and handled properly, once and for all.
Contact us today to get help with your merchant cash advance.