If you’ve ever taken out a merchant cash advance (MCA) and felt like pouring money down the drain each week, you’re not alone. Many business owners find themselves trapped by MCAs, especially when those daily or weekly deductions become toxic. When that happens, MCA restructuring can save you from the potential lawsuits that can arise if you start missing payments. At DelanceyStreet.com, we focus on helping businesses navigate their MCA debts, even if it means reducing the principle you owe, lowering your interest rates, or developing a plan that helps you avoid going out of business.

What is MCA Restructuring? MCA restructuring is a process that involves negotiating new terms with your merchant cash advance provider. It can involve a reduction in your monthly payment, a longer repayment period, or a lower overall balance. Ultimately, every lender wants to get paid back. No lender wants you to file bankruptcy. When you choose to restructure your MCA, you reduce the immediate financial pressure and give your business room to grow.

For more information on business financing and best practices, you can visit the Small Business Administration, which is a government website that was created to help small businesses thrive.

Consequences if You Don’t Restructure Your MCA Penalty fees and higher interest rates are only the start. When you fall behind on an MCA, you can face potential lawsuits and even a confession of judgement (COJ) that was signed without you realizing the full consequences. A COJ (confession of judgement) is a document that was sometimes included in MCA contracts, and once triggered, it can result in the lender going straight to court to seize your assets or bank accounts.

One big danger is if a lender believes you committed fraud in connection with your MCA. Fraud can bring serious legal consequences in federal court. Crimes that were related to false statements on your MCA application can carry potential prison time or large fines. Evidence that was illegally obtained by the prosecution might get suppressed, but if the court allows the evidence, you could be facing penalties that include restitution, fines, or imprisonment. If you think this might apply to you, it’s important to discuss it with an attorney who was trained in these matters, so you don’t risk more severe outcomes.

If your debt continues to pile up, there’s also the possibility of tax consequences. For instance, if a portion of your debt is forgiven, that forgiven amount might be considered taxable income by the IRS. For more details, visit the IRS website, which explains how certain forgiven debts can affect your taxes.

Penalties, Crimes, and Punishment When you can’t make your MCA payments, penalties can include late fees or collection costs. If the lender suspects wrongdoing, you could face crimes and punishment that were enacted to deter fraudulent behavior. Punishments for fraud can be found in criminal statutes enacted by both federal and state government agencies. Some states have laws that focus on “intent to defraud,” which can lead to felony charges if proven.

If a lender accuses you of forging documents, there might be serious repercussions. Documents that were falsified may trigger investigations by law enforcement agencies that look for patterns of fraud. Depending on your situation, you could face an investigation that could end in a criminal indictment. In some cases, the punishment can include both fines and possible jail time. You should always consult with a dedicated attorney, who was admitted to practice in your state, if you sense your MCA lender is threatening criminal charges.

How MCA Restructuring Works

1. Speak to a Debt Relief Company: Companies like DelanceyStreet.com focus on business debt settlement and can help you with MCA restructuring. We’re based out of NYC, and we help clients nationwide.
2. Review Your Financials: You’ll need to supply your profit and loss statements, bank statements, and possibly your original MCA agreements. The documents that were signed when you took the advance might have hidden clauses or a COJ.
3. Negotiate with the MCA Provider: This step often includes lowering your monthly payment, adjusting the interest rate, or agreeing to a lump sum payment to settle the debt. A lender that was properly informed about your business’s financial challenges is more likely to work out a payment plan you can afford.
4. Set Up a New Repayment Schedule: The new schedule typically stretches out your payments, giving you more room to breathe. Restructuring often prevents lawsuits and helps you avoid the severe consequences linked to default.
5. Follow the Plan: Once your new terms are set, you make your payments as agreed. If you meet your obligations, you avoid the negative outcomes that come from default, which might include garnishments, asset seizures, or harmful entries on your credit report.

Why Early Intervention Matters Regardless of where you stand with your MCA, the bottom line is that quick action can protect you. If you wait, the lender might file a lawsuit that was prepared long before your final missed payment, and they might move to secure a judgement against you immediately. Once you have a judgement, it can result in bank levies, property liens, or wage garnishments. If a COJ was included, then the lender might skip most of the standard court procedures and jump straight to seizing your funds.

When you intervene early, you’re more likely to get a lower principle or better terms. Lenders want to get some money, and they will usually prefer a negotiation instead of a bankruptcy filing.

Legal Strategies We Use to Defend You

1. Challenging Improper Contracts: An MCA contract that was poorly drafted might have illegal provisions or disclaimers that violate your state law. We can challenge those.
2. Disputing Unauthorized COJs: If there was a confession of judgement in your contract, but the lender never followed the correct process, we can argue for dismissal.
3. Requesting Loan Modifications: We often push for modifications that reduce your monthly payment and lower the overall cost. A lender who was willing to cooperate might rewrite the agreement and help you avoid trouble.
4. Fighting Fraud Accusations: If a lender accuses you of fraud, we’ll check whether any evidence was illegally obtained. Evidence that was illegally obtained might be thrown out. Once that evidence is suppressed, you might face reduced charges or no charges at all.
5. Referring to Federal and State Regulations: Government agencies like the Federal Trade Commission provide guidelines on fair lending and merchant cash advances. We use these guidelines to show whether your MCA provider followed the correct procedures.

Every defense strategy has a consequence. For instance, if your attorney successfully challenges the COJ, the consequence is that the lender must file a normal lawsuit, which is usually slower and gives you more time to negotiate. If we prove that certain contract terms were illegal, the consequence could include the court invalidating the entire agreement, forcing the lender to start from scratch.

Alternatives to MCA Restructuring

1. Business Debt Settlement: Sometimes you can settle all your unsecured debts for a fraction of what you owe. This can help you get out of toxic debt quickly.
2. Debt Consolidation: You might qualify for a term loan or a line of credit that pays off your MCA. This could lower your interest rate and give you a single monthly payment.
3. Invoice Factoring: Some businesses choose invoice factoring that was offered by alternative lenders. Factoring can supply cash flow by paying you upfront for your unpaid invoices.
4. Credit Counseling: Nonprofit agencies offer credit counseling to small businesses. They might be able to reduce your interest rate or get you a structured repayment plan that fits your cash flow.
5. SBA Loans: The SBA loans that were described on the Small Business Administration website can give you more flexible repayment terms and often have lower interest rates.

Crimes That Might Be Alleged In some cases, a business owner who was accused of lying on their MCA application or forging documents can face serious accusations. For instance, theft by deception is a crime that was punishable by fines or jail time, depending on your state laws. If the prosecution claims that you manipulated your revenue numbers, you could be charged with fraud. Punishments might include restitution, meaning you would pay back more than you initially received, plus possible criminal fines.

How We Use Our Track Record to Protect You At DelanceyStreet.com, we have experience negotiating all sorts of business debt relief options. We have attorneys who were trained to handle both civil and criminal matters. Our track record shows that over 80% of our clients enter into a monthly payment plan they can actually manage. Over 80% of our clients end up with an additional 1-3 years added to their term, which can drastically improve their cash flow.

If you face a situation in which you’re threatened with criminal action, we set up a defense strategy that relies on the facts of your case and the relevant laws. This can include gathering documents that were overlooked by the lender, analyzing how the MCA was marketed to you, and checking whether the lender broke any federal or state regulations.

Why DelanceyStreet.com is a Great Option We’re a top tier business debt relief company based out of NYC. We help businesses nationwide. Regardless of your MCA balance or how dire your finances seem, we can help you. Our dedicated approach involves immediate communication with creditors, so they know you’re working on a resolution. Sometimes we reduce the principle, sometimes we stretch your repayment timeline, and in some cases, we handle potential lawsuits if they arise.

Our results speak for themselves:

• Over 80% of our clients create a monthly payment plan they can handle
• Over 80% get more years added to their repayment schedule
• Over 80% see a reduction in their overall balance