Are you a California business owner, who has been dealing with Merchant Cash Advances (MCAs)? You might feel overwhelmed, worried, or unsure how to escape the debt spiral. We understand, and we want you to know there are strategies that can help you. We are DelanceyStreet.com, a top tier business debt relief company based out of NYC, that helps clients nationwide. Our firm focuses on business debt settlement and knows how to handle complicated MCA disputes. If you are worried about potential penalties or legal issues, keep reading, because we will explain some of the key points you need to know.

WHAT IS A MERCHANT CASH ADVANCE AND WHY IS IT RISKY?

A merchant cash advance, which is often called an MCA, is a type of financing that was designed to give quick funds. The idea behind an MCA is straightforward: the provider gives you a lump sum of money, and in exchange, it takes a percentage of your daily credit card receipts or bank deposits. An MCA that was structured poorly can create huge daily or weekly payments. If you are juggling multiple MCAs, you might feel like your business can’t breathe.

A business that is buried in MCA debt might risk default if payments cannot be met. A default that is reported to credit bureaus can damage your credit score. Once your credit score drops, the future of your business can become uncertain. Providers who are aggressive might file lawsuits, which can escalate the situation even more.

PENALTIES, CRIMES, AND PUNISHMENT RELATED TO MCAS

Although MCAs are not always criminal in nature, there are scenarios where charges might arise. A business owner who was accused of misrepresenting income on MCA applications, for instance, might face fraud allegations. Fraud that is proven in a court can lead to heavy fines or even jail time. When an MCA provider believes there was intentional deception, it might refer the matter to law enforcement. If the government files charges for fraud, the consequences can be devastating, including large restitution obligations.

An MCA that was obtained using false financial statements might trigger civil and criminal penalties. For instance, the California Attorney General’s Office, found at https://oag.ca.gov/, can prosecute business owners if they suspect grand theft, forgery, or other crimes. If you are convicted of a white-collar crime, you could be forced to pay restitution, plus you might face incarceration. If you are found guilty, the consequences can include a permanent mark on your record, which can destroy your ability to get future loans.

EVIDENCE THAT WAS ILLEGALLY OBTAINED MAY BE INADMISSIBLE

Evidence that was illegally obtained may be thrown out. When evidence is excluded from your case, it weakens the claims of the MCA provider or the prosecution, which can lower the penalties you face. Once the excluded evidence is removed from the equation, your defense team can argue that the remaining evidence is insufficient to prove wrongdoing. This strategy that focuses on suppressing improper evidence can mean the difference between a severe punishment and a more favorable resolution.

STRATEGIES FOR DEFENSE

Regardless of how many MCAs you have, regardless of the amount of the debt, regardless of your specific circumstances—there are strategies that might help you. We believe in being proactive. When you face a potential lawsuit, or if you fear criminal charges, it is important to act fast. Below are some ways we can help defend you:

1. Negotiation With Creditors
   Negotiation that is done with a skilled approach can reduce your overall debt. If you show MCA providers or creditors that your business is struggling, they might agree to a lower payoff. Once your total debt is reduced, you can free up cash that could be used to keep your business alive.

2. Challenging the Agreements
   Some MCA contracts that were created with confusing or abusive terms can be challenged. If a contract is full of hidden fees, or has unreasonable repayment terms, we can question whether it is enforceable. If a judge agrees that the MCA terms were unconscionable, the MCA provider may have to renegotiate, which could reduce your burden.

3. Examining Potential Fraud Claims
   Allegations of fraud that are unfounded must be addressed immediately. If you did not intend to deceive the MCA provider, or if they are misinterpreting your application, we can present evidence that proves your side of the story. Once we prove there was a misunderstanding, we can argue that no crime or wrongdoing took place, which can spare you from harsh penalties.

4. Disputing Illegally Obtained Evidence
   Evidence that was gathered in violation of your rights may be inadmissible. When certain text messages, bank records, or other financial data are obtained without proper authority, they should be excluded. If the court excludes that evidence, your defense becomes stronger. Once the harmful evidence is gone, the prosecution or MCA provider may be forced to drop their claims or agree to a favorable settlement.

5. Filing Complaints and Counterclaims
   Sometimes, it’s the MCA providers who act in abusive ways, using illegal tactics to collect money. If you discover that the MCA provider engaged in harassment, threats, or other misconduct, you can file complaints with state agencies, such as the California Department of Financial Protection and Innovation, found at https://dfpi.ca.gov/. If a provider breaks the law while trying to collect, you might have a counterclaim that can pressure them to settle.

HOW WE DEFEND YOU

A solid defense that is centered on your unique facts can help you avoid harsh outcomes. At DelanceyStreet.com, we pair our business debt relief experience with legal strategies designed to protect you. We believe each client who was harmed by an MCA provider deserves personal attention, especially if the MCA provider is trying to enforce unfair terms.

Below are steps we usually follow:

• Step One: Investigation
  We review all relevant documents that were signed between you and the MCA provider. If you received any demand letters, we look at them too. Then, we look for possible mistakes, hidden penalties, or potential evidence of wrongdoing on the lender’s part. Once we see issues, we know how to craft a plan.

• Step Two: Communication
  We contact the MCA provider or their legal representatives. If they are threatening lawsuits, we respond with an informed defense. If they have already sued you, we file formal responses. Once we establish open communication, we can try to negotiate a favorable resolution that reduces your debt load.

• Step Three: Legal Defense and Negotiation
  We gather the facts that explain your financial hardship, plus any proof that shows the MCA agreement is unfair. We also examine any possibility that the MCA provider broke California laws. If the agreement violates state regulations, they might agree to new terms. Once the provider sees that we mean business, they often become more willing to settle.

• Step Four: If a Lawsuit Proceeds
  We mount a formal defense. We might question how the MCA provider obtained evidence. If we find evidence that was illegally obtained, we seek to exclude it. Once evidence is excluded, the MCA provider’s case can be weakened. If the provider refuses to be fair, we can go to trial, but in many cases, we resolve matters earlier.

POSSIBLE OUTCOMES

In a best-case scenario, your total debt is reduced, your payment plan is extended, or your interest rate is lowered. If you face potential criminal accusations, the outcome might be that charges are dismissed or never filed in the first place. Once your MCA situation is resolved, you can focus on running your business without the weight of overwhelming daily payments.

WHAT HAPPENS IF CRIMINAL CHARGES ARE FILED

Criminal charges that are related to an MCA can be serious. The local District Attorney, who was notified by an MCA provider, might claim you committed fraud. If you are found guilty, you might have to pay large fines, serve probation, or even face imprisonment. That possibility that you could lose your freedom should not be taken lightly.

One of the most important things to remember is that the prosecution must prove every element of the alleged crime. If we see weak spots in their evidence, we can argue that they lack enough proof. Evidence that was illegally obtained may be suppressed, which can reduce the prosecution’s ability to convict you. Once the prosecution realizes its case is flawed, they might offer a settlement or drop the charges entirely.

IMPORTANT REFERENCE LINKS

• California Attorney General’s Office: https://oag.ca.gov/
• California Department of Financial Protection and Innovation: https://dfpi.ca.gov/

We encourage you to review these official government websites. They may provide more information about consumer protection laws, regulations on lenders, and guidance on filing complaints if you suspect wrongdoing.

FREQUENTLY ASKED QUESTIONS

What if I already missed MCA payments?

A missed payment that was reported to credit agencies can lower your credit score. If your MCA provider thinks you have defaulted, they might start legal action. Once legal action is started, you could face lawsuits or wage garnishment orders. Talk to us before the situation gets worse, so we can see if there is a way to negotiate a settlement.

Can I settle MCA debt on my own?

A business owner who was approached by debt collectors sometimes tries to handle it alone. If you want to do that, you can. However, an MCA provider who was aggressive might bully you. We have experience dealing with these companies. We can push back against tactics that are unfair. When you partner with us, you can focus on your business while we handle the tough negotiations.

What if I suspect criminal behavior by the MCA provider?

Provider misconduct that is illegal may be reported to authorities. If a provider threatened violence or used blackmail, you can file a complaint with the California Attorney General or the California Department of Financial Protection and Innovation. Once you file a complaint, the agency might investigate.