Are you a small business owner who is worried about an MCA freezing your bank account? This concern is real – if you ignore the MCA lenders when they are asking for their money back they have a way to freeze your bank account. An MCA (merchant cash advance) is a type of financing that was designed to give you quick funding in exchange for a piece of your future earnings. But, sometimes, an MCA provider who was trying to get its money back might try to freeze your account – they have legal ways of doing this, and it’s often in your agreement. This can be devastating, because it can prevent you from running your business. You instantly have funds taken from your bank account.

We are DelanceyStreet.com, a top tier business debt relief company based out of NYC, and we help business owners nationwide. We’re here to explain how an MCA could potentially freeze your bank account, why lenders do it, and how we can defend you if it happens.

What is a Merchant Cash Advance, and Who Uses It?
A merchant cash advance is a financial product, made in the 2000’s, that was made for business owners who will not qualify for traditional loans. In many cases, a lender who was offering an MCA will give you a lump sum, and then take a percentage of your daily or weekly sales until the principal and interest is paid off. If you ever default, that MCA provider might try to get a judgment that was granted by a court, and then freeze your bank account.

Why Lenders Try to Freeze Your Account
A lender who was not getting paid on the daily/weekly schedule, may see freezing your account as a final way to collect. The lender’s perspective is simple: they want to protect their money, and believe they have a legal right to do so. They tried playing ball with you, but you didn’t comply. From their point of view, this is a necessary step to recover what is owed, especially if they think you might not pay otherwise.

Can an MCA Actually Freeze Your Bank Account?
Yes. An MCA provider who was awarded a court order, or a judgment, can contact your bank and enforce a freeze. This means you can temporarily lose access to your own funds, which can be horrible if you need that money for payroll and other obligations. Losing access to these funds might force you to halt daily operations, which could lead to missed payments on other bills. If you signed a COJ – when you signed the agreement, the lender doesn’t even have to go to the courts. They can instantly – same day – file the Confession of Judgement, and freeze your bank account.

In some cases, an MCA provider who was seeking to freeze your account must follow state rules about debt collection. If they do something unlawful, you might have legal defenses. If you want more guidance on collection laws, you can check the Federal Trade Commission (FTC) website: https://www.ftc.gov.

Crimes and Punishments Related to Unlawful Freezing
A creditor who was not following proper court procedures could be violating the fair debt collection laws, which can result in penalties or fines for them. Having evidence tossed out can weaken the lender’s claim, which might encourage them to settle.

On the other hand, if a business owner who has defaulted on their business loan tries to hide assets in order to avoid a valid freeze, that could lead to serious legal trouble. Hiding business assets to dodge a judgment is sometimes considered fraud, and can bring criminal charges. It all depends on what the finer details are.

Strategic Ways We Defend You
We understand that your bank account is important, it’s where all your money goes in and out. At DelanceyStreet.com, we have a sister-law firm, managed by one of the owners of Delancey Street who is well-versed in debt negotiations when it comes to MCA lenders. We combine business debt relief strategies with a legal approach, so you get a two-pronged solution. You are never alone – you are getting business debt relief and legal support.

Here are some methods that we use in defending you:

1. Negotiating a MCA Settlement:
   We talk to the MCA lender who was threatening a freeze, and attempt to settle the debt before legal action commence. Lenders don’t want to go to court, because it can create uncertainty for them too. It also means more legal fees. Settling early can help you avoid a freeze, which means you keep your day-to-day operations running.

2. Filing a Legal Motion to Unfreeze Funds:
   If your account was already frozen, we can file a motion that was aimed at lifting the freeze. Freezing your account can sometimes violate fair business practices, which might give us leverage to restore your access.

3. Proving Wrongful Conduct by the Lender:
   If the lender who was threatening you failed to follow the proper laws and steps, we can argue they violated local and federal laws. That can invalidate the freeze on your bank account and lead to penalties against them.

4. Examining the Contracts:
   We review any MCA contract that was signed, to see if it includes illegal terms, such as hidden fees or unfair interest rates.

Viewpoints and Consequences
The MCA lender who was owed money will insist they have a right to the money in your bank account, it’s belongs to them. Meanwhile, you need to protect your business. If you do nothing, you risk losing your entire cash flow. This can trigger unpaid bills, a ruined credit score, and shattered relationships with suppliers.

If you ignore the freeze, you might face additional legal fees. For more information on dealing with frozen accounts, check the Consumer Financial Protection Bureau (CFPB) website: https://www.consumerfinance.gov.

Penalties for Non-Compliance with Court Orders
When a court that was reviewing your situation issues an order, you have to follow it. Refusing to comply can lead to contempt of court, which can mean fines or even jail time in extreme cases. Being found in contempt can harm your reputation, and can force you to spend thousands of dollars on penalties.

Government Websites You Can Use

1. Federal Trade Commission (FTC): https://www.ftc.gov
   This is where you can learn about fair debt collection rules and how they apply to MCA providers.
2. Consumer Financial Protection Bureau (CFPB): https://www.consumerfinance.gov
   This agency has information that was published for individuals who need help understanding abusive practices by lenders.
3. Small Business Administration (SBA): https://www.sba.gov
   You can find resources that were created for small business owners who want to learn about alternative financing options.