What Should I Look for When Hiring Someone to Help With MCA Debt?
Once merchant cash advance payments become unmanageable, business owners frequently discover an entirely new industry:
People offering to fix MCA problems.
A search online can produce law firms, debt-settlement companies, restructuring firms, consultants, brokers, and companies promising dramatic reductions in payments or balances.
How do you know whom to trust?
Start by asking better questions.
How Much MCA Work Do You Actually Do?
MCA disputes have their own agreements, funders, terminology, collection practices, and negotiation dynamics.
Ask specifically about MCA experience.
How long has the company worked with businesses facing MCA problems?
How frequently?
Does it recognize the funders involved in your situation?
Experience doesn't guarantee a particular result, but you should know whether you're hiring someone who occasionally encounters MCA matters or someone who deals with them routinely.
Will You Review My Agreements?
Be cautious about receiving a detailed restructuring recommendation before anyone has reviewed the documents creating the obligations.
The agreements matter.
Reconciliation provisions, guarantees, UCC language, default provisions, venue provisions, and other contractual terms can affect strategy.
Your advisor should want to understand what you signed.
Who Will Actually Handle My Accounts?
Ask whether the person you're speaking with is a salesperson or the person who will manage the matter.
If someone else takes over after enrollment, find out who.
Ask about that person's experience and how you'll communicate with them.
How Do You Get Paid?
You should understand the complete fee structure before signing.
Ask for the answer in dollars whenever possible.
If the proposed strategy succeeds as anticipated, approximately how much will you pay the company?
How much will you pay creditors?
Are there additional fees if litigation occurs?
What happens to fees you've paid if the engagement ends early?
What Happens If Something Goes Wrong?
This may be the most revealing question.
What happens if a funder won't negotiate?
What if it contacts your customers?
What if it asserts rights involving receivables?
What if it files a lawsuit?
What if the expected settlement costs more than projected?
A good plan shouldn't exist only for the best-case scenario.
Be Careful With Guarantees
Be skeptical of anyone guaranteeing a specific settlement percentage or promising that creditors cannot take particular actions without first understanding your agreements and circumstances.
Experienced professionals can discuss typical outcomes and possible strategies.
They cannot control an independent creditor.
Do They Understand the Business—or Just the Debt?
Finally, pay attention to what they're asking you.
Are they interested only in balances and weekly payments?
Or do they want to understand revenue, payroll, operating expenses, vendors, taxes, and whether the underlying company is viable?
The objective shouldn't simply be enrollment in a program.
It should be finding a solution that makes sense for the business.
The Bottom Line
When your company is under financial pressure, urgency can make the first person promising relief sound like the right answer.
Take enough time to understand whom you're hiring.
Ask about experience.
Ask who does the work.
Ask about fees.
Ask what happens when things go wrong.
And don't be afraid to speak with more than one provider before deciding.
The person helping you with an MCA crisis may be involved in decisions affecting your company, your employees, and potentially your personal finances. Choose accordingly.
If you're evaluating options for dealing with MCA obligations, Davenport Law can review your situation and explain our approach before you decide how to proceed.
Call (214) 382-0105 or contact our team to talk with us.
This article provides general information and is not intended as legal advice. The rights and obligations involved in any MCA transaction depend on the applicable agreements, facts, and law.
