When aggressive merchant cash advance (MCA) providers file a lawsuit, they often expect a quick surrender that allows them to seize the bank accounts and assets of business owners. If you are a borrower facing an MCA lawsuit, how can you turn the tide against it?
Key steps to take when gathering evidence
A strong defense targets the flaws found in the contract and the daily transaction history. Among the steps to take to boost your defense are the following:
- Submit reconciliation request records: You must produce every email or letter where you asked the lender to adjust daily withdrawals to match your actual sales. This evidence can prove the lender refused to honor the reconciliation provision and instead treated the MCA as a fixed-payment loan.
- Analyze bank statements and payment history: Compare your daily bank debits against the original contract terms to find unauthorized withdrawals or hidden fees. If the lender took more than the agreed-upon percentage of sales, then there is evidence of a material breach of contract.
- Show proof of financial distress: Gather documents showing that the aggressive, unauthorized daily withdrawals contributed to your business defaulting on other essential operational expenses. This can prove the predatory nature of the lender’s collection tactics.
It is crucial to preserve all correspondence and financial records immediately to prevent the loss of critical evidence. In addition, it is vital to build a timeline that shows the MCA provider’s aggressive actions started long before any alleged breach on your part.
Standing up to aggressive tactics
Defending an MCA lawsuit is not just about survival; it is about challenging the legality of the transaction to protect your company’s future and your livelihood. However, going through the complex legal process can be tough and overwhelming. With legal advice, you may better protect your interests and rights as you stand up to your provider’s harsh tactics.