Should I get into a Payment Plan Post-Default?
With the dramatic surge in calls we have received related to troubled Merchant Cash Advance loans, it’s time to set the record straight on an issue that we frequently run into. We have written about this many times and you can read this article on the topic of MCA default
Upon defaulting on your daily payments owed to MCA creditors, you will most certainly encounter the aggressive, harassing collection techniques employed by the industry. Rude text messages sent to your cell phone, threats of criminal action, and the use of fake caller ID programs are some of the more nefarious tactics that we see on a regular basis.
These MCA collection techniques thrive on generating fear as a means to get you, the merchant, to pay up, “or else”.
Can’t come current? Well, “No problem.” they say, “We can just “string it out until the end of time.” A direct quote from a recent negotiation. This is also framed as a “payment plan”, where the merchant agrees to pay a reduced amount in order to stave off collection activities for a period of time. What appears to be an arrangement to genuinely help you get back on your feet is actually an underhanded way to keep you further entangled in the deeply damaging cycle of usurious MCA debts.
You see, when you enter into a short term payment plan with your MCA creditor, they will continue to accrue additional interest and penalties, frequently without disclosing this. So if your original agreement was to pay back $50,000 in six months, a hardship relief period of four weeks may add tens of thousands to the original repayment amount. What may have been a short-term emergency need for cash will turn into a never ending nightmare, where the amount owed to your MCA creditor will continue to grow.
If you can no longer afford to pay your MCA loans, you must cease paying entirely and make the necessary defensive maneuvers in order to live to fight another day. You have changed business bank accounts by now, right?).
These payment plans are designed by MCA creditors not to provide the necessary relief that you need, but rather to entangle you as long as possible, and to take as much as possible from your business without any regard to your success.
The only chance for your business to survive overly burdensome, usurious MCA loans that it cannot afford is to speak with one of us to develop an aggressive settlement strategy that will tackle this issue head-on.