Question 1

Should we default to get out of paying on our cash advance or alternative loan?

Accepted Answer

Debt settlement firms reach out to small business owners (UCC leads) who have one or more alternative loan or Merchant Cash Advances to lure them into "better payment structures" and "a greatly reduced payback".  These settlement companies tells the client to default on their loans or MCAs by stopping payment and redirecting their funds to their firm so they can get a reduced payment or massive debt reduction.

When you are in good standing with a creditor and you are told to default or stop payment, this is tortious interference and subject to legal action.

Shady debt settlement companies often resort to pressuring clients into getting sued. If you are advised to default, be aware that this action could lead to legal repercussions, such as facing a lawsuit, receiving a judgment against you, or having your assets frozen. Deliberately defaulting when you are in good standing will not result in a better outcome for you. We recommend that you keep paying your creditors as long as you are able to, or work towards paying off your debt.

Question 2

Are there lawsuits against settlement companies that demonstrate shady or unethical tactics?

Accepted Answer

Typically, you won't be able to discover legal action against these companies through a Google search. Instead, you should utilize specialized search engines such as Trellis, the NY Court System, LexisNexis, or similar platforms.

Displayed below are various legal cases that have addressed the dubious practices of settlement companies in court. It is notable that a majority of these cases are linked back to MCA Resolve. MCA Resolve stands out as one of the most widespread settlement companies in existence, with affiliates across the nation. In many of the cases mentioned (and others not listed), the connections can be traced back to MCA Resolve either directly or indirectly through its affiliates.

Rapid Financial Services LLC. v. M(https://debanked.com/pdfs/mcaresolve-lawsuit.pdf)CA Resolve LLC(https://debanked.com/pdfs/mcaresolve-lawsuit.pdf)

Fundworks LLC v. C(https://appsgp.mypalmbeachclerk.com/eCaseView/search.aspx)orporate Client Services,(https://appsgp.mypalmbeachclerk.com/eCaseView/search.aspx) LLC

Itria Ventures LLC v. C(https://www2.miamidadeclerk.gov/ocs/Search.aspx)orporate Debt Advisors(https://www2.miamidadeclerk.gov/ocs/Search.aspx)

Fora Financial Advance, LLC v. Commercial Credit Counseling Services, Inc. dba Corporate Turnaround(https://iapps.courts.state.ny.us/nyscef/DocumentList?docketId=mTTkgLTRQdJkfvbtu8gRig==&display=all&courtType=Nassau%20County%20Supreme%20Court&resultsPageNum=1)

Funding Metrics LLC v. C(https://iapps.courts.state.ny.us/nyscef/ViewDocument?docIndex=bx4jRXcHJB6hWEjGMS8EjA==)ommercial Credit Counseling Services dba Corporate Turnaround(https://iapps.courts.state.ny.us/nyscef/ViewDocument?docIndex=bx4jRXcHJB6hWEjGMS8EjA==)

NewCo Capital Group VI, LLC dba Capytal.com v. M(https://iapps.courts.state.ny.us/nyscef/ViewDocument?docIndex=mDPScfsokz7flrFDI6Ok4g==)CA Resolve LLC(https://iapps.courts.state.ny.us/nyscef/ViewDocument?docIndex=mDPScfsokz7flrFDI6Ok4g==)

Floright Pump & Repair LLC v. M(https://debanked.com/pdfs/mcaresolve-lawsuit.pdf)CA Resolve LLC, ABSM LLC, Costal Debt Resolve et al.(https://debanked.com/pdfs/mcaresolve-lawsuit.pdf)

Fundfi Merchant Funding LLC v. M(https://iapps.courts.state.ny.us/nyscef/ViewDocument?docIndex=B1LCJaThUwCoy5MIQ4c75Q==)CA Resolve LLC, 1st Colonial Business Solutions, Inc(https://iapps.courts.state.ny.us/nyscef/ViewDocument?docIndex=B1LCJaThUwCoy5MIQ4c75Q==)

Small Business Financial Solutions, LLC v. C(https://casetext.com/case/small-bus-fin-sols-v-corp-client-servs)orporate Client Services, LLC(https://casetext.com/case/small-bus-fin-sols-v-corp-client-servs)

Remus Enterprises 1, LLC v. M(https://casesearch.courts.state.md.us/casesearch/inquiryByCaseNum.jis)CA Resolve LLC(https://casesearch.courts.state.md.us/casesearch/inquiryByCaseNum.jis)

ACE Funding Source LLC v. M(https://appsgp.mypalmbeachclerk.com/eCaseView/search.aspx)CA Resolve(https://appsgp.mypalmbeachclerk.com/eCaseView/search.aspx)

Question 3

The settlement company says I can get a massive discount on my payback - A scam?

Accepted Answer

Yes, this is a scam.

“We can save you 60% from what you owe the MCA company….” Or we save each client on average between 60% and 85% of what they would owe.

The majority of MCA companies would not agree to such low settlements without implementing a well-thought-out strategy that proved successful.  In fact, most MCA companies would rather take their cases to the judge and get their judgement (which they will) instead of get ripped off by the settlement company.

Is it possible to negotiate discounted settlements? Yes. However, let's be realistic... individuals in debt to these companies would not typically accept a 20% settlement unless compelled to do so. While we have settled with MCA companies for as low as $0.20 on the dollar, we do not use this to deceive clients.

It is deceptive to inform a client that settlements of 60% to 85% less than what they owe are feasible before they even become a client.

Some companies may provide redacted lawsuit settlement offers as evidence of their successful settlements. It is advisable to approach such examples with caution, as an 85% discount is uncommon.

We have also shared various examples of what certain MCA companies present to potential clients as proof of their services. However, there is no concrete evidence that the documents attached or the settlement agreements on these companies' websites are authentic.

Question 4

Some shady settlement companies do not verify debt from MCA company(ies)

Accepted Answer

One of the crucial tasks for an MCA settlement company when bringing a new client on board is to gather precise information from the creditors regarding the amount owed by the small business owner to the MCA companies. The problem arises when the settlement company either relies on the client's estimation of the debt or makes assumptions about the owed amount. This results in inaccurate or underestimated quotes. Consequently, during negotiations, two unfavorable outcomes occur: 1) a significant portion of the settlement funds held in the account is used up, and 2) the program payments increase substantially, making it difficult for the client to afford the program costs.

Professional companies, on the other hand, proactively contact creditors to obtain an accurate understanding of the client's debt. Such proactive measures are crucial for preventing potential litigation or, in cases where litigation is already ongoing, for complicating matters for the involved parties.

Question 5

Should I be wary if an MCA settlement company requires a 10% - 25% retainer or massive initial fee?

Accepted Answer

Some debt settlement companies charge an initial retainer fee for nothing.

A retainer fee is a payment made in advance for expenses. However, it is crucial to understand how these fees will be utilized. Any debt settlement firm that requires a retainer fee should clearly define the purposes for which these fees are intended. For example, Beacon Client Solutions may charge a retainer fee for legal services, but this fee is explicitly detailed in the agreement and is allocated towards the attorney's work within our team or administrative expenses related to initial court filings or negotiations.

If a debt settlement company demands a 10% or 25% retainer fee, they are likely profiting from it. Generally, attorneys do not charge 10%-15% of the total debt for retainer costs; instead, the typical range is between $5,000 and $8,000. We have encountered misleading retainer fees in agreements that fail to specify the breakdown of costs.

***It is also important to note that many of the settlement companies have separate line items for legal costs (network fees - see below) and a retainer would not then go to pay the attorney in any way, leaving the question - what is the retainer for?

Question 6

Is it normal for a settlement company to not negotiate until they have your settlement account at 20%?

Accepted Answer

Many MCA debt settlement companies have clauses in their contracts which suggest that they will not negotiate until you have paid 20% of the total settlement account has been paid.

This is NEVER a good idea.  In fact, it can be really damaging -

For instance, this comes directly from a Corporate Client Services Contract:

A. Settlement Offers: We have structured the payments into your Settlement Account to reflect an estimated settlement amount of _____ of the enrolled debt, as enumerated in the attached Schedule of Enrolled Debts. We will usually, however, begin making negotiated settlement offers to your creditors only after the accrued funds in your settlement account exceeds 20% of each debt.

It cannot be emphasized sufficiently that having a strategy like this for every industry and business is not advisable, as MCA companies can exploit UCC and other strategies to compel you to comply. Any debt settlement company that operates on this model and charges you should be shut down and penalized.

Question 7

Does the MCA settlement company really have a network consisting of "hundreds" of attorneys nationwide?

Accepted Answer

This is just foolish. Even the largest law firms do not have “hundreds” of attorneys nationwide. And no MCA Settlement (or any company) has hundreds of attorneys nationwide. And a good attorneys are worth their weight in gold.

For example, Shore Financial Solutions (https://www.shorefinancialsolutions.com/faqs)has this on their website:

“What happens if a creditor files a lawsuit?

Shore Financial Soluitons (Typo on Shore’s website) has an Attorney Network of 500+ local attorneys that handle all legal motions, as well as aid in the negotiations of your debts.”

Most of these attorneys will file an answer for a lawsuit if the business owner is sued but it’s not going to do much. When a summary judgement or some motion is forced by the MCA company, or you need a negotiator, I would not want one of the network attorneys who just push paper at your service.

Most good attorneys charge $400-$500 per hour. Our attorneys work for less but not much less. Networks like the “Sunshine Network” or "Frontline Network" have (in our opinion) copy and paste attorneys which you pay $100 per month.

To the layperson it seems like a good idea. However, given the serious nature of a lawsuit, I would not want one of these attorneys representing anyone. This is not to say that some attorneys in the network are not good. However, what we are saying that no attorney would charge $100 per month to defend someone in any serious manner.

The goal should also be to not get sued.

Question 8

The Settlement Company has a Minimum Performance Standard in their Agreement.  Unless something happens to you that they usually cause....

Accepted Answer

Some MCA settlement companies offer a minimum performance standard, promising small business owners a refund or a more affordable program if not met.

It's important to be cautious - considering the complexity of settlements, it's highly unlikely for a company to consistently meet a minimum performance standard.

Furthermore, many settlement companies include clauses stating that they are not obligated to meet the minimum standard if legal action is taken against you. This loophole allows them to evade responsibility when you are sued, potentially leaving you without the promised performance standard. This tactic is commonly used when the settlement company estimates settling at 43% of your debt, and you end up getting sued, relieving them of their obligations - a classic maneuver.

Question 9

Did you receive a quote from someone and the settlement company did not review your MCA Agreements?

Accepted Answer

Be cautious of MCA settlement companies that offer quotes without reviewing your MCA agreements. If this occurs, be wary - or run!

MCA agreements contain valuable and critical information that guides the work of experienced MCA settlement teams. Many MCA providers may delay negotiations with the MCA companies for months. While waiting may have its benefits, it does not eliminate the need for communication. Failure to address UCC lines and notifications promptly can lead to dire consequences for small businesses.

Question 10

The MCA Settlement Company Does Not Discuss UCC with you

Accepted Answer

Utilizing the Uniform Commercial Code (UCC) is a common and effective method for MCA companies to recover their funds successfully. We have extensively covered this topic and the related articles are available on our website.

Lenders and MCA companies utilize UCC filings or liens to assert their rights to collateral, liens, or a secured interest. In the realm of Merchant Cash Advance, MCA companies secure receivables as collateral under the Universal Commercial Code.

A UCC is a formal legal document filed with the state Secretary of State (SOS) to declare that the lender or MCA provider holds a secured lien on the business. This provides the lender or MCA provider with the authority to seize and foreclose on the collateral or funds in case of non-payment by the small business owner.

If a settlement company handling MCAs fails to assess their approach towards UCC actions, it may indicate a lack of expertise or concern for the client.

Question 11

Does the MCA settlement company does nothing and just makes stuff up?

Accepted Answer

MCA settlement companies often fabricate information in order to secure the small business owner’s account. For example, we have numerous clients who have fallen victim to scams perpetrated by these companies, where they are promised a list of goods that are never delivered. In reality, their performance is lackluster at best.

Many settlement companies take on clients and either delegate all the work to them or do nothing at all. This conduct puts the client at risk of UCC freezes, lawsuits, and other legal actions, as well as potential harassment from vendors, employees, and family members.

If you are guaranteed the world, it must be delivered. To avoid falling victim to this scam, always ensure that all promises are documented in writing!

Question 12

Be cautious of "Performance Documents" and Samples of Greatness.

Accepted Answer

People love results and proof of success.  However, be wary of settlement companies who place their sample settlement documents online.

Settlement companies who boast their results and add redacted settlement documents do things like threaten future negotiations by sharing 3rd party information, detract from good faith with creditors and their attorneys, share privacy information regarding the client or their attorney, break non-disclosure agreements with 3rd parties and more.
Anyone who throws redacted settlement docs on their website or share with the client are painting a picture which in most cases is not true.

We have samples on our website as well.(https://www.beaconclient.com/post/12-scams-that-shady-mca-settlement-companies-use)

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¿Mi negocio califica?

Need Help with your MCA Lawsuit? Do you have other questions? Contact us today. Working with someone already? We can do better. A simple message could save your business, your vitality, your wealth, and your assets.

¡Conéctese con nosotros ahora!

Need Help with your MCA Lawsuit? Do you have other questions? Contact us today.
Working with someone already? We can do better.
A simple message could save your business, your vitality, your wealth, and your assets.