Preparing for an MCA Debt Attorney: 5 Things to Bring to the First Conversation

If your business is struggling with paying back a merchant cash advance (MCA), it can seem like the payments will never end. It’s an exhausting time.

Before you meet with an MCA debt attorney, bring five key things.

• First, bring the complete contract you signed for your merchant cash advance and all your payment records.
• Second, bring six to twelve months of bank statements.
• Third, bring everything the funder sent you including demand letters, lawsuits, liens, and anything else.
• Fourth, gather your business’s financial records and information on other loans you have.
• Finally, write down your story and your questions.

The Full Agreement

When you look at an agreement, it’s easy to think that the fine print on the signature page is where the important part of the deal is - after all, that’s where you had to sign. But that’s not always the case in legal agreements. At the same time, the regular text of an agreement is often incomplete on its own. Companies use attachments and exhibits to fill out agreements. Companies make exhibits, schedules, and other parts of agreements just as important as the agreement they’re attached to. It’s always important to have the full agreement in front of you so you can refer to it, which is why you should bring the whole thing.

The MCA debt attorney will review these documents, and will look at them for things like a confession of judgment clause (the lender can use the courts to collect, often without warning or a hearing) and whether you’re on the hook personally for the money. The lawyer will also look at whether the MCA is a real loan, or a sale of your future earnings.

For proof of payments made so far, bring receipts of payment or at least 6-12 months of business bank statements. They show how much money your business really took in, and where you spent it. The bank statements show money in, money out, and how fast the money runs through your business. In these documents, an MCA debt attorney will look for how much money you actually paid back to the funder and when you did it. The bank statements will also show if there were times when you were unable to pay.

Funders may file liens or freeze bank accounts. They may also file lawsuits against the borrower. Bring anything you can showing what the funder is doing. Keep all notices and other paperwork you’ve received from the merchant cash advance funder, including demand letters, threats, lawsuits, judgments, and phone messages. When dealing with lawsuits, the courts expect you to respond in a timely manner, which is why you should bring everything in the package, regardless of what it was, with you to the consultation. In New York, you have 20 days to appear if you were handed the summons in person.

Then there are your profit and loss statements, balance sheets and cash flow statements. A balance sheet tells you what your business owns and owes. This is so the lawyer will understand your business’s financial health, how much money you make. Bring paperwork for any other loans you have, too. Knowing about other debts your business has is critical for an attorney to know.

A Written Account of Your Story

Write down a timeline of events, starting from when you got the money and why you took the advance. List everything that has happened from that date to today. But it may be hard for you to remember all of it offhand. Having a written account of your story will be a great guide for your lawyer. The lawyer will need to ask about you, your business, and your relationship with the funder. Share stories about who you dealt with, who said what, what the funder said and offered or has been asked for, and what you were offered for settlement.

The MCA debt lawyer needs to know the real and specific cause why you fell behind on your payments. It’s very important to be honest about this. Sometimes events happen beyond your control, an economic downturn, a sudden drop in revenue. No one should judge you for your struggles. List your assets and your liabilities - what you own, and what you owe.

Make sure to write down what all your questions are. Otherwise, you might forget to ask them while you’re at the office. This also gives the lawyer a sense of what you want to learn.

Questions you may have include what is your legal status and is this an actual loan or not. You may be wondering what you should do right now. Or are you worried about whether you can stop the lender from debiting your account? Or maybe it’s this: You’re wondering if you can settle the MCA with a negotiation. Finally, you may be wondering if you are personally responsible for repaying the debt. Be sure to bring these and other questions to your MCA debt lawyer so you can talk about them.

Different Ways to Charge

The cost to hire a Merchant Cash Advance lawyer can depend on multiple things. Lawyers use different ways to charge. They may charge per hour, have a “flat rate” price, or ask for a contingency fee for certain outcomes. Your lawyer can draw up a written summary and step by step plan.

After you consult with your lawyer, their staff and you will have work to do. You will need to supply documents and other items related to your case as needed. As a client you have a responsibility to respond to the MCA attorney’s calls, questions, and requests for information in a timely fashion, for the lawyer’s responsibility to you relies on the information you give to them. Also be sure to listen to and act on any advice the lawyer gives you about stopping payments, such as revoking ACH authorization, or avoiding new debt. Try keeping a log of each phone call, with the name of the person you talked to, their position in the company, the phone number they called from. If you don’t share the funder’s phone calls and threats, it could cause confusion and delays on your case. If you talk about your case with your funder or other third parties, tell the attorney immediately.

While you might feel vulnerable, it’s important to remember that you have options available to you.