If you can no longer make your merchant cash advance payments, debt settlement may be the right option. However, it’s important to choose the right person or company to represent you. While many people turn to merchant cash advance settlement companies, they often charge high fees and engage in unethical practices. It’s important to understand how these companies work, their pros and cons, and why it’s often better to work with an attorney.
What is a Merchant Cash Advance Settlement Company?
A merchant cash advance (MCA) settlement company is a firm that helps business owners negotiate and settle their merchant cash advance debt.
Similar to other types of debt settlement, MCA settlement is often used when a borrower can no longer make their payments. Instead, a settlement agreement may allow them to pay a lower amount, either in the form of a lump-sum payment or installment payments.
An MCA debt settlement company isn’t the same as an experienced debt settlement attorney who has the experience and legal acumen to negotiate with MCA lenders. As a result, there are some risks to working with this type of company and some red flags to look out for.
Evaluating a Merchant Cash Advance Settlement Company
If you’re considering using a merchant cash advance settlement company to negotiate your MCA debt, it’s important to carefully evaluate them before making a commitment.
Key Factors to Consider When Choosing a Settlement Provider
If you’re looking for a debt settlement provider to help you with your MCA debt, there are a few things to consider:
- Cost: First and foremost, it’s important to consider cost. The cost of debt settlement may vary depending on the company you choose and whether you work with a company or an attorney. Some providers may charge you upfront before they do any work.
- Time in Business: While the amount of time a provider has been in business isn’t the most important factor, it’s certainly one to consider. You likely want to work with a provider that has years of experience helping people manage their MCA debt.
- Credentials and Expertise: Ask what credentials and experience the company has. Ideally, look for an attorney or a company that has debt settlement attorneys on staff. If a company doesn’t have attorneys, or just ones “on staff” then find out what credentials make them suitable and how you have access to those attorneys.
- Debt Settlement Process: Different providers may use a different process to settle debts. The process a company uses can impact the amount of debt you’re able to settle and the potential downsides, such as impact on your credit score.
- Track Record: MCA debt settlement isn’t a 100% guarantee. When comparing different companies, it’s worth finding out about their track record. Do they successfully settle most debts? What’s their success rate? Be aware of sales pitches with guaranteed results.
How to Verify a Company’s Credibility and Track Record
One of the most important steps of choosing a debt settlement provider is verifying their credibility and track record. You can ask the company about their track record directly, but often the best information will come from reviews and complaints from past customers.
First, read reviews from current and past customers on sites like Trustpilot.com and the Better Business Bureau (BBB) website. You should also see what complaints have been filed against the company. You can read complaints on the BBB website or by visiting the Consumer Financial Protection Bureau (CFPB) consumer complaint database.
Finally, consider asking colleagues and other business owners if they have experience with an MCA debt settlement attorney. The best referrals often come from people you know who have been through their own debt settlement journey through trusted advisors like an attorney who specializes only in debt.
Essential Questions to Ask Before Hiring an MCA debt Settlement Lawyer
Before signing a contract with any debt settlement attorney, it’s important to ask questions to make sure you’re prepared for the process and know exactly what to expect. Here are some questions that can tell you a lot about both the debt settlement process and the company:
- How long will the MCA settlement process take?
- How will MCA debt settlement impact my credit score?Â
- What are the potential risks of MCA debt settlement?
- What happens if you aren’t able to settle my debts?
- Do you have debt settlement attorneys on staff?
Warning: Be wary of any company that promises a quick resolution or guarantees they can settle your debt. There are no guarantees when it comes to debt settlement, and a company that promises there are is likely a red flag for a scam or unethical company.
Benefits of Using an MCA Settlement Company
If you’re struggling with your MCA debt, debt settlement is one option that’s available to you. Here are a few benefits of working with an MCA settlement attorney:
- Easier Than DIY: Many people attempt the DIY route of debt settlement and quickly learn how challenging it can be. Working with a local debt help lawyer takes some of the time and pressure off you and may improve your chances of a successful settlement.
- Debt Relief and Improved Financial Stability: Working with a debt settlement firm can lead to faster debt relief and improve your company’s financial stability.
- Better Cash Flow Management for Business Growth: If you’re struggling with your business’s cash flow, debt settlement may be your best option. Settling your debt for a lower amount frees up other money from business growth.
- Reduced Stress and Pressure from Aggressive Collectors: Being stuck in debt can be stressful and often leads to aggressive collection tactics from lenders and debt collectors. Working with a debt collector helps ease that burden.
Potential Drawbacks and Risks of MCA Debt Settlement Companies
While there are benefits to working with a debt settlement company, there are also some downsides and risks to consider. In fact, some business owners find that working with an MCA settlement company makes their situation worse. Make sure to take these into account before entering into an agreement with any settlement companies.
- Hidden Costs and High Service Fees: Debt settlement companies often charge costly and complex fees. If you aren’t careful, you could end up on the hook for fees you weren’t expecting, even if your debt isn’t settled.
- Possible Negative Impact on Business Credit and Lending Options: Debt settlement companies often encourage you to stop paying on your debts during the settlement process, which can harm your credit and limit your other borrowing options.
- Limited Customization: Every small business and situation is different, but debt settlement companies often take a one-size-fits-all approach to each client, leaving little room for customization based on your unique situation.
- Legal Implications: The debt settlement process doesn’t shield you from legal risk. In fact, it could put you at increased risk for a lawsuit if a debt collection company instructs you to stop paying your debt.
Why an MCA Attorney May Be a Better Choice
If you need help addressing your MCA debt, consider working with an experienced debt settlement attorney rather than a company. Attorneys have legal expertise and experience in negotiating fair settlements, increasing your chances of a positive result.
A lawyer can also offer more tailored and strategic solutions for your business based on your unique situation rather than using a one-size-fits-all approach like debt settlement companies often do.
Finally, an attorney can advocate for you and help you assert your rights, including offering protection from unfair collection practices that often exist in the MCA debt collection industry.
Tayne Law Group has been helping clients with their business debts for more than two decades and has the experience necessary to help you address your MCA debt. We offer free phone consultations with debt settlement experts where you can discuss your debt situation and find out what personalized solutions may be available to you. Call us today at (866) 890-7337 or fill out our short contact form to learn more and schedule your consultation. There’s no obligation, and we never share or sell your information.
