Are you a Houston business owner struggling with a merchant cash advance (MCA)? Do you worry about the potential penalties and financial nightmares that can come from falling behind on payments? If so, you might be wondering what legal rights you have, what punishments you could face, and how you can defend yourself if a lender takes action.

We are DelanceyStreet.com – a top tier business debt relief company, based out of NYC, helping clients nationwide. Our focus is on guiding you through the complex world of MCAs, including defending you when things spiral out of control. We handle business debt settlement, talk to lenders, and help you avoid losing your livelihood.

Below, you’ll find easy-to-understand legal information about Houston MCA defense. We’ve included references to government websites, strategies on how we’d defend you, and possible consequences if you don’t take action.

Understanding Merchant Cash Advances and the Legal Implications

A merchant cash advance is an arrangement that was created to help businesses get quick money by selling future credit card sales. Because MCA providers are not banks, their agreements can sometimes have hidden fees, large daily repayment obligations, or harsh collection practices. If you fail to pay, it can lead to lawsuits, judgments, and more.

Consequences of defaulting on an MCA can be serious. Debtors who are unable to keep up with MCA payments can face aggressive calls, legal threats, or even personal liability if there was a personal guarantee involved. That can lead to wage garnishments, bank account freezes, and the possibility of a lien on your business property.

One key issue is evidence that was illegally obtained, which can be challenged in court. If your lender gathers financial records in a way that was against the law, it can result in that evidence being thrown out, which can weaken the creditor’s case against you. When evidence is thrown out, your defense grows stronger, and the court might dismiss or reduce the claims against you.

It’s important to know that if an MCA provider crosses legal lines, you may have grounds for a defense. If that happens, you could walk away with a significantly lower debt obligation, or even force the provider to drop the case.

Government Resources
Visit the Texas Attorney General’s website to learn more about general consumer protection laws in Texas. You can also check the Federal Trade Commission (FTC) for regulations on unfair or deceptive business practices.

Potential Crimes and Penalties Involving MCAs

When people think of “crimes” in the context of MCAs, they usually refer to fraudulent acts by either the business owner or the MCA provider. Here are a few examples that might come into play:

1. Fraudulent Loan Applications
   Evidence that was fabricated or altered, such as fake bank statements or misrepresented revenue, can prompt criminal charges. If a business owner knowingly provides false documents, it can lead to serious legal consequences, including fines, restitution, and possible jail time.

2. Unfair Debt Collection Practices
   MCA providers who use threats, harassment, or deception to collect payments could be in violation of state or federal laws. That can result in penalties such as fines, legal actions by state agencies, or even the revocation of their license to operate.

3. Breach of Contract That Was Intentional
   If you sign a merchant cash advance agreement that was predatory, and the provider tries to enforce certain abusive terms, you can raise defenses under Texas law. If a court finds these terms are unconscionable, it might void parts of the contract, leading to a drastically lower repayment amount.

If you face criminal allegations related to MCA fraud or if a lender accuses you of wrongdoing, you could face fines, lose your property, or even spend time behind bars. When a crime leads to a conviction, it can destroy your business reputation, cause you to lose your professional licenses, and make it impossible to secure future financing.

No lender wants you to file bankruptcy, but if you fail to deal with your MCA problems, you might consider that route. Filing for bankruptcy can lead to more complications, including court supervision of your assets and negative marks on your credit.

How We Defend You in Houston MCA Cases

We have multiple defense strategies. Our approach is grounded in the idea that every lender wants to get paid back—which means they will often negotiate if they think they might lose in court otherwise. Below are some of our methods:

1. Challenging the MCA Contract
   We look for clauses that violate Texas or federal law. If we find sections that are legally unenforceable, we can have them removed, which might lower your total debt or at least make it easier to pay. If the MCA provider is using a confession of judgment (COJ) in a way that’s illegal in Texas, we’ll fight to get it thrown out. That can result in you preserving more of your bank account and continuing to run your business.

2. Attacking Illegally Obtained Evidence
   Evidence that was gathered by breaking privacy rules or violating the Fair Debt Collection Practices Act (FDCPA) can be challenged. If the judge rules that the evidence is inadmissible, the MCA provider’s legal position weakens. That can lead to a settlement with better terms for you.

3. Negotiating a Fair Settlement
   Sometimes, the best result is a new agreement with reduced payments or extended time to pay. If your cash flow is in trouble, a fair settlement might prevent a judgment against you. If you can prove financial hardship and the MCA provider sees that a trial is expensive, they’ll often agree to a compromise, which helps you stay in business.

4. Arguing Predatory Lending
   MCAs can include factor rates that are so high they mirror criminal usury, which is prohibited in many states, including Texas. If we show the terms are grossly unfair, the court may force the MCA provider to reduce interest or remove fees. That can leave you with a more reasonable debt load, which helps you regain stability.

5. Asserting Breach of the Peace Claims
   If the MCA provider tried self-help actions like forcibly taking your assets or threatening your employees, we can claim breach of the peace. That can lead to penalties or even countersuits against the lender, which can put you in a stronger position to renegotiate.

Flow of Houston MCA Defense
Consider this simplified flow-chart format to see how things can unfold:

Houston MCA Defense -> Early Warning Signs -> Default or Potential Lawsuit ->

• If Lender Has Solid Evidence -> Aggressive Collection Action ->
  • Outcome: Judgment or Settlement
• If Lender Violated Laws -> Evidence Thrown Out or Reduced Debt ->
  • Outcome: Better Negotiation Terms or Case Dismissal

If your MCA is in default, we might catch early warning signs like repeated missed payments or hostile calls from the lender. If the lender escalates to a lawsuit, we check the evidence. When we find wrongdoing by the lender, it can result in that evidence being excluded, which affects the entire case. Ultimately, you can walk away with either a restructured deal or, in some situations, a complete dismissal.