Business owners occasionally run into financial difficulties when dealing with merchant cash advances. When this happens the provider reserves the right to request a restraint order. This order will leave the small business owner with a frozen bank account along with any assets of the individuals named in the order. This includes personal plus business assets and accounts most times. The authorities give this right to the provider with the belief that the business owner committed a crime and has benefited financially from this crime. Merchant cash advance legal issues frighten many. What happens when you default on a merchant cash advance, and what can a business owner do in this situation to prevent the restraint from being issued and get back on solid financial footing?
Merchant Cash Advance Companies and Bank Restraints
While an MCA loan may sound like a great idea, things often go bad quickly. Providers retain the right to take money out of the client’s bank account with no notice, put a lien on business property, or take other drastic action if the business owner fails to fulfill the agreement. Bank restraints and MCA's go hand in hand, and clients often find their business and personal accounts are at risk. The contract signed remains of great importance for this reason, and business owners need an experienced MCA attorney on their side if the relationship goes bad.
Options When Defaulting
Business owners find they have options when they cannot make the payments as agreed. The owner might choose to close the business or they might change the payment plan. Each option offers benefits and drawbacks a business owner must be aware of. If closing the business, the owner needs to avoid taking certain steps. For instance, a business owner cannot switch bank accounts right before closing or take cash as payment to avoid depositing funds into the account. Doing so could lead to further legal action and costly expenses related to the litigation. Another option involves changing the loan to allow for the repayment of the funds, and a merchant cash advance lawyer helps as this process moves forward. This is why it is of utmost importance to have the best merchant cash advance attorneys in your corner if you are faced with this or any other merchant cash advance legal issues.
Modifying the Agreement
Merchant cash advance services providers receive the option of issuing a bank restraint to collect the funds owed to them. Any assets or cash of the business owner, both personal and business assets plus cash, can be frozen as payment for the loan as part of the merchant cash advance collections process. This differs from small business loans because the lender in that situation can typically only freeze business accounts and assets. As no business owner wants their accounts and assets frozen, a notice of default must lead to consulting with a merchant cash advance attorney for help. Our attorneys work with the provider to modify the loan and provide the business owner with merchant cash advance relief. Agreements that include a reconciliation clause allow for this relief, which is better than defaulting on the MCA which constitutes a breach of contract Speak to us today if you are in danger of a default on a merchant cash advance. Prompt action typically prevents further legal action. You have worked too hard to build your business and you don’t want to lose it because you delayed. A repayment plan prevents this from happening, but the plan can only be created if you take swift action. Don’t put this step off another minute, as you want your business to survive this challenge and move forward to thrive.
