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Facing A Merchant Cash Advance Lawsuit In New York?

As a business owner, you have a lot to think about when trying to keep your business running successfully. If one of the issues on your mind is a Merchant Cash Advance (MCA) lawsuit in New York, you may be wondering what to do next. An MCA lawsuit can be extremely complex and frustrating. This legal situation is often even more challenging than many other types of business disputes and lawsuits involving resolving credit card debts and other debt-related obligations. The fact that you are being sued in New York State – if you do business elsewhere in the country – may be adding even more challenges to the issue at hand.

When you are dealing with a serious matter like an MCA lawsuit, it is crucial that you take the right steps, quickly. Start with solid legal advice and take action soon, before you have the opportunity to make an unintentionally costly misstep in the legal case against you. Contact a skilled and reputable MCA lawyer today to start fighting back against the merchant cash advance lawsuit that your business is currently facing.

Merchant Cash Advance Lawsuits

A merchant cash advance, often referred to as an MCA, is an alternative source of financing that some businesses use to maintain sufficient cash flow throughout a particularly intense cycle of financial ups and downs. Although this resource seems, at first glance, to function much like a business loan, an MCA is not a loan. It is a credit arrangement wherein the business receives funds from a merchant cash advance company, and – in return – promises some portion of future sales and accounts receivable. This means that merchant cash advances don’t follow the same rules and guidelines that apply to business loans.

The underlying cost of an MCA can be substantial over time. Companies that issue MCAs consider the risks associated with a specific business and assign it a factor rate, as opposed to the kind of interest rate assignment that is typical for a business loan. An MCA can have a staggeringly high repayment cost when calculated as an annual percentage rate (APR), including fees tied to the transaction. Usually, an MCA company arranges to deduct payments out of a company’s business income, set up as daily or weekly withdrawals directly from the venture’s business bank account until the balance of the MCA reaches zero.

Many business owners find themselves caught in a debt cycle, as the highs and lows of their company’s collections and receivables may not always add up to enough to satisfy an MCA’s required payment schedule, and fees pile up. That’s when an MCA lender may file suit. Many MCA lenders include a provision in their agreements selecting New York as the venue for litigation so that any lawsuit filed related to the contract in question will be filed and tried in New York. The business that owes repayment is then forced to defend the case there rather than in a local court near wherever the business is located.

Dealing With A Merchant Cash Advance Lawsuit

MCA lawsuit defense strategy is complex, detail-oriented and starts with carefully reviewing the agreement at issue. If your company is facing an MCA lawsuit, our team will need to thoroughly assess the specific language used in your agreement to fully understand the claims against your business. An MCA lender may claim in the lawsuit that you breached the terms of the MCA agreement by failing to make payments and/or violating other provisions of the contract.

Working with an experienced MCA lawyer is essential, as doing so will help to ensure that you can present the strongest defense possible. Not every attorney has experience with this area of the law. As a result, not every attorney is prepared to aggressively advocate on behalf of your business interests in response to a lawsuit filed by an MCA company.

When you work with a skilled, reputable, and experienced MCA attorney, you can expect that they will take the following steps when starting to craft a legal strategy on your company’s behalf:

  • Review the method of service the MCA lender used when filing the lawsuit to determine if it complies with New York State rules
  • Assess your rights under state and federal laws that protect debtors to evaluate whether the MCA lender followed all the required steps in executing the merchant cash advance arrangement and collecting payments
  • Evaluate the evidence that the MCA lender is utilizing, to see if there has been an actual breach of contract and whether the claims made within the claim are supported by legally admissible facts

Seeking Legal Advice

It is essential to act quickly by seeking legal advice from a qualified attorney who has experience with MCA lawsuits in New York. With your MCA lawyer’s assistance, it may be possible to negotiate a settlement with the company, which could potentially end the legal action against your business, reduce the amount you owe, and/or provide more favorable payment terms that your company has the ability to meet effectively. An attorney who has extensive experience negotiating repayment arrangements is going to be well positioned to better ensure that any settlement agreement is fair and reasonable.

Preparing For Litigation

If you and your MCA lawyer find that settlement negotiations are unsuccessful, you will need to prepare for litigation. This may involve gathering evidence, preparing witnesses, and developing a solid defensive strategy. Depending on the circumstances of your case, you may be in a position to successfully challenge the validity of the MCA agreement, dispute the claims made by the MCA company, or assert affirmative defenses. Your defense strategy will be tailored to your unique situation.

Agreeing To A Payment Plan

One option to help you avoid the expense and stress of a lawsuit defense may be to agree to repayment terms, if you are willing and able to pay the amount owed under the MCA agreement but need more time to meet your obligations. A skilled MCA defense attorney will be a strong ally in helping you to set up a payment plan with the MCA company in ways that are fair and transparent. It’s possible that you can agree to a payment plan that is manageable and affordable, depending on the approach that your MCA company is willing to take.

Consult With An Experienced MCA Defense Lawyer Today

Facing a Merchant Cash Advance lawsuit in New York can be challenging, but with the help of an experienced attorney, you’ll be well positioned to navigate the process efficiently and to protect your rights. As soon as you are aware that the MCA you’ve taken on is in danger of default, or when you get notice of a lawsuit against you, it is critical to seek legal guidance as soon as possible to better ensure that you have the best chance of success. Contact the Law Office of Simon Goldenberg, PLLC today to schedule a free legal consultation by calling (888) 301-0584 to start resolving your MCA lawsuit so that you can get back to taking care of business.