HELP, A Merchant Cash Advance sued me

The 3 Step Guide to Handling a Business Lawsuit from a Creditor

In this economy, many businesses are having trouble paying their creditors in a timely fashion.?The result is often a lawsuit that causes even more damage by increasing the debt with collection and legal fees, time consuming distraction to normal business operations, and potential reputation damage to customers and employees.?You are probably reading this because you’ve just been sued.?Know that you are not alone.?Any business can be sued at any time. It’s part of our legal system.??You hoped it would never happen to you, but in the back of your mind, you knew it could.??It’s normal to feel overwhelmed, upset and scared, but it can be made easier by knowing what to do when it happens.

Often, but not always, before you are sued by a creditor or vendor, you’ll get a demand letter. It comes from a party,?complaining about something and asking you for corrective action. The demand is not a lawsuit. You may be able to show that you do not owe them anything, or a significantly different amount.?Or you may be able to reach a settlement. By these steps you can possibly avoid being sued.

A lawsuit usually doesn’t move forward until you receive the complaint. Some people who know a lawsuit is coming try to evade the process server. Usually this is wasted effort. Today’s technology helps sheriffs and process servers find you. If they can’t, the court lets plaintiffs use a substitute method, like placing a notice of the lawsuit in a newspaper, and treating that as if you received the complaint. So usually (not always) it’s easier to just receive the complaint and then take steps to defend the claim.

STEP 1:?The LAWSUIT

DO NOT: Communicate directly with the plaintiff

Many of our expert sources remind business owners that anything they say regarding the lawsuit can be used against them. For this reason, you should not attempt to contact the plaintiff before you've thoroughly reviewed the suit. From there, all communications with the opposing side should be conducted through your attorney and the plaintiff's.

"Once a lawsuit has been filed, you should not communicate with the plaintiff at all," said John R. O'Brien, a Chicago-based attorney. "The time for talking things out and resolving issues amicably ended when they filed suit, so all communication should be through your company's attorney.?If the plaintiff is someone that you must communicate with — a current employee, or another company that you have an ongoing business relationship [with] — you should make clear that you will not discuss the lawsuit with them."

Review the Papers Promptly

Only a short time is allowed to respond to the complaint: 20–30 days in most courts.?So don’t set the complaint aside.?Read it to get an idea what the claim is about, and find out how soon you must respond.??Often, people read the complaint, see the claims are false, and decide for this reason not to take it seriously. The problem is the court or judge doesn’t know which side to believe. No matter how untrue the claims, you must take the complaint seriously and respond. If you don’t, the court will find you in “default” and rule against you.?I will go through the summons with you, and explain in “plain english” what they are claiming, and how much your financial exposure is.?Most of the time, you do owe what they say you owe, including the interest, fees and attorney costs.

Answer the lawsuit

Answer the lawsuit before the deadline.?If you don’t take action, you’ll have a judgement against you for the full amount of the suit, plus accruing fees.?Don’t?believe that the attorney won’t get a judgement against you because you have been negotiating in good faith.?First Choice Debt Solutions has a network of attorneys that will answer the complaint for you, buying us time to settle this claim.??Depending on the state, a lawsuit can buy you 3-18 months to focus on sales and hoard cash.

STEP 2:?Prepare a "HIT LIST"

Make a list of everyone you owe money to. Include:

• "Type of Debt" (Merchant Cash Advance, Equipment Lease, Supplier, Credit Card)
• Is it Personally Guaranteed?
• Secured or Unsecured Debt?
• Is the Creditor Vital to Your Business?

We are "anchoring" our creditor's expectation, and helping us come up with a true picture of the business's condition. My clients have accepted that they owe the debt, or realize it will be cheaper to try to settle it then hire an attorney and fight it.?If you have a legitimate legal defense or a dispute, an attorney is probably your best option.??

Stay focused on your business.

"Don't lose sight of the fact that you have a business to run, and a bottom line to think about. So put aside any feelings of anger or pride. Oftentimes I hear clients say, 'These Merchant Cash Advances are Loan Sharks, why should we have to pay?' The answer is that winning the case can cost a lot more than settling. You have to make a calculation: Will the company be better off, financially, if it pays the MCA $15,000 than if it spends $40,000 to win the case? As the saying goes, 'A bad settlement is often better than a good trial.'" – John R. O'Brien

STEP 3:?Compromise and Settlement

When they are sued, many people expect to have to defend. My clients are guilty, they owe the money. By using your HIT LIST, you can appeal to your creditor's sense of fairness and logically prove to them that collecting may be harder than working with you via an "Offer in Compromise". ?First Choice Debt Solutions are experts at dealing with creditors.?We have had over 1,000 clients and have settled over $35,000,000 of debt, saving our clients Millions of Dollars including our fees!? If you owe money to a creditor reach out here to learn more and jump on a call.