Are you a business owner who was served with a lawsuit over a merchant cash advance? Are you worried about what might happen if you can’t pay back your daily or weekly payments? Look no further than DelanceyStreet.com, which is a top tier business debt relief company based out of NYC, that helps clients nationwide. We understand how stressful these situations can be, especially for small business owners who are juggling payroll, inventory, and bills. This article is here to help you understand Merchant Cash Advances (MCAs), the potential legal consequences if you cannot pay them back, and possible defense strategies that can keep you safe from serious penalties.

WHY MCAS CAN BECOME A PROBLEM
A merchant cash advance is a form of financing that was designed to provide quick cash. It’s not a traditional loan. Instead, you get a lump sum in exchange for giving the MCA provider the right to take a percentage of your credit card sales each day or week. That money that was advanced to you can be helpful at first, but it often comes with extremely high fees and strict collection practices. This can lead to a situation where your cash flow is strained.

If you start missing payments, you might be sued. That lawsuit that was filed against you can come with serious consequences, because the MCA provider will want to get a judgment. A judgment that was approved by a court can result in bank account levies, business asset seizures, and more.

POTENTIAL PENALTIES, CRIMES, AND PUNISHMENTS
People often wonder, “Could I face criminal charges if I do not pay back my MCA?” Generally, not paying a debt is not a crime by itself. However, you should know that certain behaviors related to MCAs, such as fraud, can bring serious criminal consequences. For instance, evidence that was falsified during the application process may lead to accusations of criminal fraud. This can mean serious charges under Louisiana law or federal law.

• Fraud Charges
  Fraud that was committed during the financing process can lead to felony charges, because the state wants to discourage people from providing false documents or lying about their business finances. If convicted, a person might face large fines and even jail time.

• Penalties for Breach of Contract
  Breach of contract that was proven in court is usually a civil matter. This can result in money judgments and possibly wage garnishments or property liens. Judgments that are not paid can linger on your record, because they typically remain enforceable for many years.

• Consequences for Default
  A default that is declared by your MCA provider allows them to accelerate the balance, which means they might demand that you pay the entire amount at once. If you cannot pay, you risk being sued for the full amount plus fees.

IMPORTANT LEGAL REFERENCES
If you want to learn more about how Louisiana’s laws handle contracts and finance disputes, you can review the Louisiana State Legislature website. In addition, you can visit the Louisiana Attorney General’s website for basic consumer protection issues, or the Federal Trade Commission for national guidelines on unfair business practices.

HOW WE DEFEND YOU
At DelanceyStreet.com, we believe in fighting for business owners who were overwhelmed by MCAs. Below are some strategies that we often see in MCA lawsuits.

1. Arguing Misrepresentation
   If an MCA agreement that was presented to you misrepresented the total costs, that can be grounds to fight back. Evidence that was found to prove they misled you could result in a potential dismissal or reduction of what you owe. This might also lead to claims that the provider violated federal or state consumer laws.

2. Challenging Illegal Confessions of Judgment
   Confessions of judgment are sometimes used by MCA providers to skip court procedures. A confession of judgment that was signed without proper warnings can be challenged. When these are ruled invalid, the MCA provider loses one of its strongest weapons. This can lead to a significant delay in any enforcement actions, because the court may force them to start from scratch.

3. Investigating Unlawful Interest Rates
   Merchant cash advances often have high factor rates that, in some cases, can resemble illegal interest rates. If the MCA was structured like a loan but had interest that was illegally high, the court might label it as usurious, which could reduce or eliminate what you owe.

4. Proving a Breach of Duty
   Sometimes, MCA providers do not follow their own contract rules. A provider that was supposed to send you monthly statements, but failed to do so, may be in breach of contract. If they breached first, they might not be able to enforce certain terms.

5. Questioning Jurisdiction
   Did the MCA provider file a case in a court that doesn’t have authority over you? A jurisdiction that was incorrectly claimed can mean the lawsuit is filed in the wrong place. If you prove this, the lawsuit can be dismissed or transferred, which may give you more time to prepare.

CONSEQUENCES OF A SUCCESSFUL DEFENSE
When a judge decides in your favor, the MCA provider might lose the right to seize your assets, which means you get to keep your money. This can greatly improve your financial stability, because you can continue focusing on your business without a looming judgment.

FLOW CHART OF EVENTS FOR A LAWSUIT
Think of the MCA lawsuit process like this:

Situation A -> Lawsuit Filed -> Service of Process -> Your Response -> Court Hearing -> Judgment or Dismissal

• Situation A: You’re behind on MCA payments. You get notices that you owe money.
• Lawsuit Filed: The MCA provider files a complaint in court.
• Service of Process: You receive legal papers letting you know about the suit.
• Your Response: You must respond or risk default.
• Court Hearing: Both sides present evidence and defenses.
• Judgment or Dismissal: The judge either rules in favor of the MCA provider, or dismisses/limits their claims.

If the suit is dismissed, you can keep your assets, which means your business has room to breathe. If the suit results in a judgment, you might face serious financial liabilities, which could severely damage your business.

COMPARISON TABLE: CRIMINAL VS. CIVIL RISKS

Aspect	Criminal Risk	Civil Risk
Nature of Punishment	Fines, probation, or jail time for fraud	Money judgments, property liens, or garnishments
Standard of Proof	Beyond a reasonable doubt	Preponderance of the evidence
Main Law Enforcement	Prosecutors (local, state, federal)	Courts and private attorneys
Consequences on Reputation	A criminal record that may limit future options	A civil judgment that harms credit or finances

Use this table to see the difference between facing a criminal complaint and dealing with a civil lawsuit.

KEY CHECKLIST FOR MCA DEFENSE

Checklist Item	Reason
Gather All Contracts	You need the original contract that was signed to spot unfair clauses.
Collect Payment History	Evidence that was organized about your payments can show you tried to make good faith efforts.
Check for Confession of Judgment Language	A COJ that was included improperly might be your best defense.
Look for Misrepresentations	Statements that were misleading in the MCA contract can invalidate the entire agreement.
Consult an Attorney Right Away	An attorney who has handled MCA cases can develop a custom strategy for you.

Each item in this checklist can help you build a stronger defense, which can protect your business from severe outcomes.

FAQ QUICK-REFERENCE TABLE

Question	Quick Answer
Can I face jail time for not paying an MCA?	You typically won’t face jail time just for nonpayment, but evidence that was fabricated can lead to criminal charges.
Should I try to negotiate a settlement?	Yes, many MCA providers prefer out-of-court settlements. A reduction that is significant might save you money.
What if I already signed a confession of judgment?	You might still be able to challenge it. A COJ that was obtained illegally could be thrown out.
Where can I read more about my legal rights in Louisiana?	You can visit the Louisiana Attorney General’s website or Louisiana Legislature.
Why DelanceyStreet.com?	We are a premier, and award winning business debt relief company, who was created to help you fight back.

WHY CHOOSING DELANCEYSTREET.COM MAKES SENSE
At DelanceyStreet.com, we have extensive experience with business debt relief, and we know how tough MCAs can be. We use our knowledge of state and federal laws, plus strong negotiation skills, to get results for our clients. We engage directly with MCA providers, and we know the strategies that were proven to work. Here’s what you can expect when you work with us:

1. Immediate Case Review: We take a look at your MCA documents, so we can spot any issues that help your defense.
2. Dedicated Team: Our staff, which includes legal pros, works on your behalf so that you can focus on running your business.
3. Open Communication: We keep you informed about new developments, because clarity is key.
4. Aggressive Negotiations: Many MCA providers will settle if they know they risk losing in court. We push them to get you the best possible outcome.
5. Nationwide Reach: Even though we are located in NYC, we proudly assist clients in New Orleans and around the country, because your location shouldn’t limit your access to help.

EVIDENCE THAT WAS ILLEGALLY OBTAINED MAY BE THROWN OUT
There are times when MCA providers gather evidence in ways that violate your privacy rights. Evidence that was illegally obtained may be thrown out. This can destroy their case, which means the judge might dismiss part or all of their complaint. Once the evidence is out, the MCA provider loses major leverage. As a result, they might rush to settle, or they could drop the lawsuit altogether.

CONSEQUENCES FOR YOU
When this evidence is thrown out, you keep more money in your pocket, which can be the difference between staying afloat and shutting down your business. This advantage means you can free up cash to pay employees, manage your inventory, and plan for the future.