Merchant Cash Advance Restructure
Have you taken out merchant cash advance loans that you can no longer afford or have already defaulted on? Is your business struggling with debt while you’re looking for a way out?
In this article, we will go over what happens when a merchant cash advance is defaulted on, your options for restructuring a merchant cash advance to avoid default, and your options for dealing with your merchant cash advance worries once and for all.
What Happens if You Default On a Merchant Cash Advance?
When you default on your merchant cash advance loans, there will be a lawsuit filed soon thereafter. Your merchant cash advance funder will pursue a money judgment against you and your business through the use of the court system.
You will be served with a summons and complaint that will require a response to the lawsuit within either 20 or 30 days, depending upon 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 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 other various means as well as contact your vendors or brokers and merchant processors to erroneously state that their UCC liens are superior liens and that your merchant processors and vendors should pay them directly since you have defaulted on your loans.
If you are using a Payroll company to pay your employees, the MCA lenders may also attempt to interfere with your payroll company relationship. This can completely cripple your business, leading you to close your doors forever.
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 many times much easier to analyze and restructure internally. There are many places that costs could be cut.
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?
Any reduced costs should be used to pay down any existing debt, starting with the high interest ones first.
Research Alternate Financing Options for Better Terms
Next, you need to spend a day at the computer and 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 meet.
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 advance loans.
Although not advised, you could also obtain an additional merchant cash advance loan at better terms than your current advances, to help pay off your existing 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 need to hire a reputable organization to help you restructure your merchant cash advances. There are many programs out there to do this. Let’s review them.
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, this loan should either lower the interest rates or extend the terms, thereby lowering your daily, weekly or monthly payments.
Unfortunately, with so many junk and hidden fees, many times these loans just appear to help, but inevitably leave you with the same or similar financial burden that you were in before the consolidation.
Reverse consolidations are a method to slowly help ease your cash crunch burden. A reverse consolidation company 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 funders (freeing up your cash flow). This will remain in effect until your merchant cash advances are paid in full.
The reverse consolidation company will extend your terms and you will continue to pay them until your agreed upon fee is paid in full. This does increase the total cost of your loans over the entire term.
Merchant Cash Advance Settlement
Merchant cash advance settlement is a process by which your debt is negotiated for less than what you owe with your creditors.
If done by the right firm, it 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 who 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.
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 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 50 years of experience mitigating and settling debts. Business Debt Law Group specializes in restructuring merchant cash advances debts. Our team has saved our clients millions of dollars by restructuring existing debts.
Not only will we assist to restructure your merchant cash advances, 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 working with merchant cash advance funders. Your court cases and any confession of judgments (if you have any) will immediately be 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 how to best protect your business and personal assets.
Your legal fees will be a set 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. 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, judgements 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 the 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 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.