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St. Paul MCA Defense Lawyers Business Debt Relief

February 24, 202418 min read

IF YOU’RE LOOKING FOR A BUSINESS DEBT SETTLEMENT COMPANY, VISIT DELANCEY STREET. CLICK HERE NOW.

St. Paul MCA Defense Lawyers Provide Expert Business Debt Relief

Businesses in St. Paul face many financial challenges. Cash flow issues, unexpected expenses, seasonal slowdowns, and even predatory lending practices can leave companies struggling with overwhelming debt. Merchant cash advance (MCA) loans, in particular, are notorious for excessively high interest rates and aggressive collection tactics that can cripple small businesses. Fortunately, experienced St. Paul MCA defense lawyers are available to provide expert debt relief services tailored specifically to the MCA industry.

How MCA Loans Work

Merchant cash advances provide businesses with quick access to capital in exchange for a percentage of future credit card and debit card sales. The loans do not have a fixed repayment schedule. Instead, an MCA company makes daily withdrawals from the business’s bank account until the balance has been repaid – plus very high fees and interest charges that frequently exceed 100% APR.While MCAs may seem like an easy financing option, they come with many risks:

  • Exorbitant interest rates of 60-350% APR or higher
  • Daily repayments that drain bank accounts faster than projected
  • Lack of transparency on actual costs
  • Aggressive collections and lawsuits for missed payments
  • Personal liability for business owners

Predatory MCA companies rely on confusing language and fine print to hide the true costs. And when businesses inevitably fall behind on payments, harsh collection efforts often follow.

How St. Paul MCA Defense Lawyers Can Help

Defending against an MCA lawsuit or negotiating debt relief requires experience with the MCA industry’s questionable tactics. St. Paul MCA defense lawyers have the necessary background to protect client interests in these situations through services like:

1. Reviewing MCA Agreements

MCA contracts contain complex terminology that makes it difficult to discern the interest rate, actual repayment amounts, and other key terms that impact financing costs. St. Paul MCA lawyers carefully analyze these agreements to clarify a client’s rights and obligations under the MCA. This enables more informed decision-making around accepting a settlement, fighting a lawsuit, or strategizing other legal options.

2. Responding to Lawsuits

Predatory MCA companies frequently sue business owners when payments fall behind. In many cases, an aggressive response from knowledgeable MCA defense counsel causes the MCA company to back down or agree to much more favorable settlement terms. Even if litigation moves forward, St. Paul MCA lawyers build strong defenses around issues like excessively high interest rates and improper lending practices.

See also  Atlanta MCA Defense Lawyers Business Debt Relief

3. Negotiating Debt Relief

St. Paul MCA defense lawyers are experienced negotiators. They leverage their litigation capabilities and industry knowledge to negotiate debt relief solutions like:

  • Interest rate reductions
  • Lower fixed repayment amounts
  • Lump sum settlements for less than the balance owed
  • MCA balance waivers in exchange for returning the principal

4. Advocating for Legal Changes

Beyond helping individual clients, St. Paul MCA defense lawyers also advocate for legal and regulatory reforms related to MCA lending practices. Efforts currently underway include lobbying state lawmakers to implement interest rate caps and working with the Minnesota Attorney General’s office on investigations into predatory MCA activities across the state.

Key Considerations in MCA Debt Relief Cases

St. Paul MCA defense lawyers emphasize several key issues as they advise clients and argue cases related to MCA financing disputes and debt relief:

Unconscionable Interest Rates

While no interest rate caps currently exist on MCA loans issued to Minnesota businesses, defense lawyers build strong cases around rates that are clearly excessive. Rates exceeding 100% APR often shock the conscience of judges and arbitrators, strengthening claims of predatory lending practices.

Transparency in Communicating Terms

MCA contracts frequently contain confusing terminology and complex variables related to repayments, obscuring the loan’s true costs. Failure to clearly disclose interest rates and repayment amounts violates consumer protection laws.

Improper Lending Practices

St. Paul MCA defense lawyers investigate improper practices like misrepresenting repayment terms, falsifying credit applications, withdrawing unauthorized payments, harassing borrowers, and failing to adequately underwrite loans based on a borrower’s ability to repay. Evidence of these activities supports counterclaims against the MCA.

Personal Liability Protections

MCA loans are issued based on a business’s expected future credit card receipts. St. Paul MCA defense lawyers argue that owners cannot be held personally liable for business debts tied solely to the performance of the company.Pursuing claims related to excess interest rates, lack of transparency, improper lending practices and personal liability often puts pressure on MCA companies. Many choose to settle cases rather than risk an unfavorable ruling that could impact their entire lending model.

Why Work With St. Paul MCA Defense Lawyers

St. Paul MCA defense lawyers combine extensive experience fighting MCA companies with intimate knowledge of Minnesota laws and regulations impacting business financing. This enables them to build strong cases around:

  • Usury claims related to excess interest rates
  • Violations of truth-in-lending laws
  • Deceptive and unfair trade practices
  • Breach of contract
  • Bad faith negotiations
  • Unjust enrichment

In addition to representing clients in lawsuits brought by MCA lenders, St. Paul MCA defense lawyers also provide guidance to businesses considering an MCA loan. They help owners understand agreement terms, assess risks, and determine if an MCA is the right financial option in light of other alternatives like business loans from banks or credit unions. Avoiding predatory MCA loans from the start saves businesses significant hardship down the road.For companies already entangled with an MCA loan and struggling to keep up with payments, St. Paul MCA defense lawyers offer hope through experienced and aggressive debt relief representation. They have successfully reduced or eliminated business debt through settlements or litigation in dozens of cases over the years – even when companies faced six-figure balances and intense pressure from unscrupulous MCA lenders.

See also  Arizona MCA Defense Lawyers Business Debt Relief

The Bottom Line

Predatory MCA loans sink countless small businesses across Minnesota. But companies dealing with MCA debt have allies in St. Paul MCA defense lawyers. Their guidance and representation helps business owners fight back – escaping lawsuits, negotiating settlements, and reforming local laws to protect other companies from entering into similarly disastrous financing arrangements.Businesses seeking relief from MCA debt accumulate evidence, assess legal options, and enlist experienced counsel. To explore customized debt relief strategies from St. Paul MCA defense lawyers, <a href=”https://www.delanceystreet.com/”>contact Delancey Street</a> today. Our team proudly serves clients throughout the Twin Cities metro area.

Common Legal Defenses in MCA Cases

St. Paul MCA defense lawyers deploy several key legal arguments to contest lawsuits from predatory merchant cash advance companies. Common defenses raised in these cases include:

1. Unconscionable Interest Rates

Though Minnesota does not cap interest rates on MCA loans, defense lawyers argue that rates exceeding 100% APR are substantively unconscionable. Case law precedent confirms that courts may deem excess interest fees unenforceable when rates are deemed unfair or unjust.St. Paul MCA defense lawyers highlight several factors when asserting claims of unconscionable interest rates, including:

  • The business’s lack of sophistication in financial or legal matters
  • Misleading statements or omissions by the MCA provider
  • Terms so imbalanced that no reasonable party would agree to them
  • Business necessity – for example, needing emergency funds for essential operations

Presenting evidence along these lines allows lawyers to establish a strong claim of predatory lending practices. Even if a judge or arbitrator does not invalidate the entire agreement, prevailing on an unconscionable interest rate argument generally leads to a favorable settlement for the borrower.

2. RICO Violations

The federal Racketeer Influenced and Corrupt Organizations (RICO) Act provides treble damages and attorneys fees for injuries caused through patterns of illegal activity – like those commonly perpetrated by predatory MCA firms.Activities that trigger RICO claims in MCA cases may include:

  • Mail and wire fraud
  • Misrepresenting or obscuring loan terms
  • Unfair debt collection practices
  • Harassing and intimidating borrowers
  • Improperly withdrawing funds from accounts

By pursuing RICO claims, St. Paul MCA defense lawyers can secure sizeable financial judgments against unscrupulous lenders. The risks associated with RICO liability frequently compel settlements.

3. Violating State Consumer Protection Laws

In addition to leveraging claims under federal racketeering statutes, St. Paul MCA defense lawyers also highlight violations of consumer protection laws like:

  • Minnesota Prevention of Consumer Fraud Act
  • Minnesota Uniform Deceptive Trade Practices Act
  • Minnesota Unlawful Trade Practices provisions

Specifically, defense lawyers focus on deceptive statements made during the MCA solicitation process and unfair loan servicing practices. Evidence of deception or obfuscation related to interest rates, repayment terms, withdrawal amounts, and other key loan provisions strengthens claims under these consumer protection statutes – leading to favorable rulings or settlements for the business owner.

4. Challenging Choice of Law and Venue

MCA contracts typically contain fine print stipulating that disputes must be adjudicated in New York and governed by New York law. But St. Paul MCA defense lawyers move to dismiss these provisions by challenging jurisdiction and choice of law clauses.Since loans involve Minnesota small businesses, Minnesota laws should rightfully dictate the grounds for legal claims and defenses. St. Paul MCA defense lawyers leverage the significant inconvenience and expense of litigation in New York to negotiate resolutions on favorable terms for local business owners.

See also  Alaska MCA Defense Lawyers Business Debt Relief

5. Contesting Personal Guarantees

Although MCA loans finance business operations, agreements typically require owners to personally guarantee repayment. But St. Paul MCA defense lawyers maintain that these personal guarantees are unenforceable.They argue that MCA balances represent corporate debt – not personal loans. The business entity entered into the agreement and obtained funds that were invested into company activities. Efforts to pierce the corporate veil directly conflict with contract terms stating that balances are owed by the business. This makes personal guarantees excessively broad and thus invalid.

6. Asserting Bad Faith

Finally, St. Paul MCA defense lawyers argue that aggressive collection tactics and refusal to negotiate repayment terms constitute bad faith dealings under contract law. MCA providers have a duty to act in good faith when enforcing agreements. Activities like:

  • Making excessive withdrawals leading to overdraft fees
  • Refusing to provide detailed payment histories
  • Rejecting reasonable offers to modify agreements
  • Threatening borrowers with bankruptcy or criminal charges

Clearly demonstrate a failure to act in good faith as the agreement requires. By asserting claims of bad faith contract violations, St. Paul MCA defense lawyers can again secure favorable judgements or settlements for their business clients.

Borrower Strategies for Avoiding MCA Debt Issues

The most effective way for St. Paul business owners to avoid issues with merchant cash advance loans is simply not taking them in the first place. But many companies turn to MCAs in desperation without fully grasping the consequences. While defending a business from an MCA lawsuit is possible with help from experienced lawyers, avoiding the need for litigation entirely is obviously the preferred outcome.Business owners improve their chances of success with an MCA loan by following strategies like:

1. Seek Alternative Financing Options First

Too often, businesses use MCA loans as the funding source of first resort rather than last. But MCAs should only be considered when other financing options won’t suffice. Alternatives to explore include:

  • Bank or credit union loans – These provide lower interest rates along with fixed monthly payments.
  • Crowdfunding campaigns – Rewards-based platforms help companies raise capital from their customer network.
  • Angel investors – Wealthy individuals provide investments in promising startups.
  • Venture capital – VC firms infuse cash into emerging companies in exchange for equity stakes.
  • Government-backed loans – SBA loans offer longer repayment periods with competitive interest rates.

2. Thoroughly Vet the MCA Company

If MCA financing becomes essential, conduct extensive due diligence on potential providers. Warning signs of predatory MCA firms include:

  • Excessively high advertised rates
  • Poor Better Business Bureau ratings
  • Limited history in business
  • Connection to offshore entities
  • Numerous lawsuits from past borrowers

Also verify MCA companies have a local address and contact information. Reputable firms doing business in your community typically have stronger incentive to maintain responsible lending practices.

3. Read Agreements Carefully

Never rush through signing an MCA contract. Review all terms meticulously with qualified legal and financial advisors. Key items to understand explicitly include:

  • Interest rates and APR
  • Daily repayment amounts
  • Withdrawal procedures from bank accounts
  • Personal liability clauses
  • Reasons for loan default

If agreements lack transparency or contain concerning provisions, explore other MCA providers before moving forward.

4. Structure Payments Appropriately

Upon securing an MCA loan, take steps to manage withdrawals and prevent excessive overdraft fees:

  • Set up a separate bank account to receive daily payments
  • Closely monitor balances and adjust as needed
  • Keep sufficient reserves to account for repayment fluctuations
  • Notify the MCA provider if issues emerge with payment processing

Proactive communication and financial planning helps resolve problems before they spiral out of control.

5. Seek Modifications if Needed

When repayment challenges eventually occur, immediately discuss options for modifying terms with the MCA provider. Possible options include:

  • Lowering daily withdrawal amounts
  • Paying a larger lump sum to reduce the overall balance
  • Extending the repayment period to ease cash flow pressure

Most MCA contracts allow for good faith modifications provided the business proactively engages with the lender. Financial transparency and sensible repayment proposals demonstrate a willingness to honor reasonable obligations under the agreement.

 

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