Quick Summary

MCA contracts are written to favor funders, with confession of judgment clauses, personal guarantees, and other terms that put business owners at a disadvantage. Handling MCA debt without the right legal help can lead to costly mistakes. Consult an experienced business debt relief attorney today to learn about your options.

If you’re behind on your merchant cash advance (MCA) payments, your funder may have started sending default notices, collection efforts, and threats of lawsuits. These financing arrangements aren’t typical loans, and their contracts heavily favor funders over borrowers. Having an attorney by your side is especially critical for navigating contract terms and protecting your business.

What Makes MCA Contracts So Difficult to Fight Without Help?

MCA agreements are specifically structured in a way to limit your rights as a borrower and favor the funder at every turn. Most business owners sign them under pressure to get cash flow, and they don’t realize what they’ve agreed to until it’s too late and the payments have become unmanageable.

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MCA contracts commonly include a few traps that hurt business owners. They include:

  • Confession of judgment (COJ) clauses: These clauses allow a funder to obtain a judgment against you without notice or a court hearing.
  • Personal guarantees: If your contract includes a personal guarantee, a funder can go after your personal assets if your business can’t repay the debt.
  • Broad default provisions: These provisions can trigger acceleration of the full balance owed over a minor issue, even if you haven’t missed a payment.
  • Venue clauses: These dictate where a lawsuit can be filed and which court will hear any disputes, even if the lawsuit is in an entirely different state.

What Are the Risks of Handling MCA Debt on Your Own?

Dealing with your MCA debt alone exposes you and your business to costly mistakes that can make your legal position worse. Merchant cash advance companies handle these disputes all the time, and they have legal teams well prepared for them. On the other hand, you’re probably dealing with this for the first time with a contract that wasn’t written to protect you.

Small business owners can run into these common pitfalls when they deal with MCA debt without legal representation:

  • Admitting liability or making statements that hurt any future defenses
  • Accepting bad settlement terms without having an attorney look over the agreement
  • Missing deadlines tied to default notices, judgment filings, or court appearances
  • Ignoring legal notices, only to find out a judgment has already been entered

Unfortunately, by the time many business owners see the red flags and ask for help, they have fewer options than if they had sought legal representation earlier in the process.

What Can an MCA Attorney Actually Do for You?

A business debt relief attorney can review your MCA contract, identify possible defenses, negotiate directly with your lender and, if needed, defend you in court. Their combination of legal knowledge and direct experience with MCA funders is invaluable when you’re struggling with your MCA debt.

Here are a few specific ways a merchant cash advance attorney may be able to help:

  • Reviewing your contract and identifying illegal, challengable, or unenforceable terms
  • Challenging confession of judgment clauses used to obtain judgments without proper notice
  • Negotiating reduced payoffs or modified payment plans that reflect what your business can actually afford
  • Defending you against lawsuits and bank levies
  • Coordinating strategy across multiple MCAs, especially if several funders are pursuing collection at the same time

Depending on the facts of your case, several legal arguments may be available to reduce the amount you owe or challenge the MCA altogether. Here are some of the options an MCA lawyer might explore:

  • Recharacterization of the MCA: Some MCAs are really loans in disguise, structured that way to avoid usury laws. If the agreement functions more like a loan, it may be recharacterized and subject to interest rate limitations.
  • Fraud or misrepresentation: If the funder misrepresented the terms, cost, or structure of the advance during the sales process, you may be able to challenge its validity.
  • Motion to vacate a confession of judgment: If a judgment was entered without proper notice or procedure, it may be possible to have it vacated, giving you a fair chance to appear in court and argue your case.
  • State law violations: Some MCA providers use collection practices that violate state-specific debt collection laws.

How Tayne Law Group Helps Business Owners with MCA Debt

Tayne Law Group focuses specifically in business debt defense relief and MCA defense. Leslie Tayne, Esq., has over 25 years of experience in the legal debt field and she and her team have worked with small business owners across industries and states to reduce their MCA obligations and stop aggressive collection tactics before they can cause further damage.

If you’re a small business owner struggling with your MCA debt, we may be able to help. Contact us today by calling (866) 890-7337 or filling out our short contact form to schedule a free phone consultation. We never share or sell your information, and all conversations are confidential.

Frequently Asked Questions

What does an MCA attorney charge?

MCA fee attorney structures vary depending on the law firm and the nature of the case. Many firms offer a free or low-cost initial consultation to review your situation, read through your MCA contract, and discuss some of the options that may be available to you.

Can an attorney stop an MCA from debiting my account?

An experienced MCA attorney may be able to stop your funder from debiting your bank account. They may be able to negotiate a pause or modification to your daily or weekly debits or, in extreme situations, take legal action to have the payments stopped altogether.

How do I know if my MCA contract has illegal terms?

The best way to find out if your MCA contract has illegal terms is to have an experienced attorney review it. Attorneys that specialize in this area are well-versed in these contracts, familiar with common traps in these agreements, and will be able to recognize red flags that may not be obvious to you.

What if the MCA company already has a judgment against me?

If your MCA funder already has a judgment against you, an attorney may be able to have it vacated, depending on how it was obtained and if a confession of judgment was used. 

Is it too late to hire an attorney if I am already being sued?

No. You may have fewer options than if you had consulted an attorney before the judgment was issued, but it’s still possible to have the judgment vacated, negotiate a settlement with the funder, or present a solid defense in court. It’s important to act quickly before your options are further diminished.