Predatory Lending Lawyer
AFFORDABLE ADVICE WHEN IN FINANCIAL DISTRESS
Things will not always go smoothly in your business. There will be times when revenue drops or unexpected liabilities put your profit and loss statement into the red. It is easy to panic in these circumstances and reach out for any lifeline. But, if your business does so without competent legal advice, you risk making the problem worse. Luckily, Moriarty Underhill offers affordable options for you to get advice on the legal issues related to your business.
RESIST DEBT LIKELY TO PUT YOU OUT OF BUSINESS
Some creditors cater to businesses in distress. They have been creative over the decades, coming up with many unusual debt instruments like factoring agreements, sales of future receivables, so-called “Merchant Cash Advances,” and other deals. Often these deals come with security agreements, personal guarantees, terms and conditions so expansive that they risk strangling your company when it can least afford it. On top of this, many times the security agreements proposed end up conflicting with earlier security, leading to stacking of multiple creditors and potentially causing problems with all of them.
GO INTO DEALS WITH EYES WIDE OPEN
Too often, businesses take out onerous, non-traditional financing without really understanding the terms and conditions and what they mean for the business. Is the creditor going to be able to interfere with customers directly? Can the business still continue operating as normal when its receivables and cash is all pledged as security? Knowing precisely what changes the loan requires to how you do business is critical. For example, some Merchant Cash Advance deals allow the business to demand a reduction in the monthly payment based on receivables. If you do not know about these terms and plan for them, you might accidentally give up this and other important rights.
RESIST ILLEGAL AND UNFAIR LENDING
It is almost always better to have an attorney look over a new deal before it is signed. But, if your business is already in trouble with a lender, an attorney can help examine its terms to see if it is proper. Not every kind of loan instrument have been approved for use in every state. Some may be creative attempts to skirt usury laws or other rules designed to prohibit predatory lending. Even a proper loan can become unfair if the lender is overly aggressive and has decided to focus on putting you out of business instead of finding a reasonable way to be repaid.
CREDITOR WORKOUTS ARE BEST
The Firm does not just represent businesses that owe money; it represents creditor companies, too. In both cases, often the best solution is to be realistic about what revenues exist that can be used to pay creditors while allowing the business to operate. Just as a business does not want to dissolve or file a Chapter 11 bankruptcy, a creditor should not want to push so hard that the debtor has no other choice. Not only can you not get blood from a turnip, but both sides have to pay their attorneys while the turnip is being squeezed. The Firm believes in finding the outcome with the best expected value whenever possible. If both parties are honest and reasonable, it is usually possible to find some tolerable outcome.
If You Need Help With Predatory Lending, Contact Moriarty Underhill LLC Today For A Consultation!
FREQUENTLY ASKED QUESTIONS
A Merchant Cash Advance (MCA) is a financing arrangement where a business receives a lump sum in exchange for a portion of its future receivables. They are not technically loans, which means they can sidestep traditional lending regulations and usury limits. While they are not outright illegal in Colorado, some MCA agreements are structured in ways that are abusive or conflict with other existing security agreements on the business’s assets, and their terms should always be reviewed by an attorney before signing.
Common signs include extremely high effective interest rates, automatic daily or weekly withdrawals from your bank account, broad security agreements that cover virtually all business assets, personal guarantees that expose your personal finances, and aggressive enforcement terms that allow the lender to accelerate the entire balance for minor defaults. If a lender is pushing you to sign quickly without time to review the terms, that is itself a red flag.
Depending on the circumstances, yes. Grounds for challenging a loan can include usury violations, unconscionable contract terms, misrepresentation at the time of signing, or conflicts with earlier security agreements that make the new agreement unenforceable. An attorney can review the loan documents to identify any such grounds and advise on the best course of action.
Before signing any financing agreement — especially non-traditional products like MCAs, factoring agreements, or revenue-based loans — have an attorney review the terms. Key questions to answer: Does this conflict with any existing security agreements? What is the effective annual interest rate? What rights does the lender have if you miss a payment? What happens to your customers and receivables while this agreement is in place?
If a lender is taking steps that go beyond their rights under the agreement — such as contacting your customers inappropriately, making misrepresentations, or attempting to accelerate a debt in bad faith — there may be grounds for legal counterclaims. In some cases, lender conduct can give rise to claims for breach of the implied covenant of good faith and fair dealing. An attorney can assess the lender’s behavior and advise on whether there are viable defenses or affirmative claims.