Austin, Texas Business Debt Settlement Lawyers
Many business owners in Austin end up with business debt because they were hoping to grow; or perhaps they needed a life line. Either way, now—that debt is toxic, and it’s impossible to keep up. When you enroll in a business debt settlement program, like the one offered by DelanceyStreet Debt Relief—you’re creating a way to avoid going out of business. Our team focuses on all sorts of unsecured business debt, including Merchant Cash Advances, SBA loans, business credit cards, and more.
Often, the biggest issue with a Merchant Cash Advance (MCA) is that the daily or weekly deductions eat away at your cash flow, leaving you unable to meet payroll, pay rent, or keep up with suppliers. Many of our clients first realize they’re in distress when they receive persistent late notices and start missing minimum payments. If this sounds familiar, you’re not alone, and more importantly, there is a path forward—even if lenders or MCA companies have issued default notices.
The Legal Landscape in Austin
Under Texas Business & Commerce Code (§1.101 et seq.), merchant cash advances are sometimes treated like traditional loans, even though they’re structured as the “sale of future receivables.” Depending on how the MCA is set up, it may skirt Texas usury laws—or run afoul of them if the effective interest is too high. Creditors might also file lawsuits under breach of contract if they believe you’re not making payments. That’s why we have a sister law firm. We’re owned by an attorney, which means if your case escalates legally, we can help mount a defense.
Regardless of how severe your debt is, our role at DelanceyStreet Debt Relief is to evaluate your unique circumstances, review your contracts, and see if your MCA’s fees and rates exceed what might be legally acceptable in Texas. With that clarity, we can negotiate from a position of strength—or, if needed, dispute the agreement in court.
Different Strategies for Handling MCA Debt
Our team prides itself on establishing lines of communication with lenders immediately after you join our program. By discussing your financial challenges openly, we can often get creditors to the table. Here’s a table summarizing common approaches for business debt relief, especially in Austin:
| Strategy | Key Components | Potential Pitfalls |
|---|---|---|
| Debt Settlement | Negotiating reduced principal, lower interest, or extended terms | Forgiven debt may be taxed (Form 1099-C). |
| Debt Consolidation Loan | Combining multiple MCA debts into one monthly payment | Credit score and collateral requirements can be limiting |
| Restructuring the Existing Agreement | Adjusting payment frequency or lowering rates | Requires creditor cooperation; some lenders are stubborn |
| Chapter 11 Business Bankruptcy | Court-supervised reorganization while still operating | Legal fees and court oversight can be significant |
No matter which strategy you pursue, the key is to ensure your business can maintain daily operations without getting buried in fees.
Roleplaying a Few Scenarios
- Local Austin Food Truck
- Many food truck owners rely on MCAs to cover unexpected costs—like equipment repairs or bulk ingredient orders for events. But once sales dip, the daily withdrawals become overwhelming. We’d start by reviewing the original MCA contract and verifying whether your MCA fees violate Texas usury laws. If there’s evidence of predatory terms, we’ll push for reduced principal and a longer payback schedule, so you can keep your truck rolling without missing supplier payments.
- Austin Construction Company
- A construction firm might juggle multiple MCAs to finance heavy machinery for big projects. If one client delays payment, everything unravels. In that case, we’d look at whether consolidating all MCAs into a single monthly payment is possible. Alternatively, if lenders are already threatening lawsuits, we may bring in our sister law firm to dispute any unconscionable contract provisions in court.
Legal and Tax Nuances
When you settle debt for less than you owe, the IRS might treat the forgiven portion as taxable income. We recommend discussing this with a CPA or tax attorney to avoid an unexpected bill. Meanwhile, if you ignore or delay addressing your MCA debt, creditors could pursue judgments. In Texas, that might lead to liens or even attempts to garnish your business bank account—unless your entity structure offers some protection. This is why it’s important to understand the details of your personal guarantee, if you signed one.
Moreover, a chronic pattern of late payments can damage your business’s reputation with suppliers and financial institutions—affecting your ability to borrow or expand down the line. We firmly believe in taking proactive steps before your debt spirals further.
Practical Tips & Why DelanceyStreet Can Help
- Collect Your Documents
- Gather at least six months of bank statements, your MCA contract, emails with creditors, and any default notices. Having these on hand lets us quickly evaluate your situation.
- Communicate Early
- We’ve found that creditors typically respond more favorably when we reach out on your behalf, provide updated financials, and demonstrate your commitment to a workable payment schedule.
- Think Long-Term
- Even if you get some relief now, make sure your cash flow can handle the restructured payment. Our goal is to reduce the total owed, get lower interest rates, and stretch out your payment schedule, so you can focus on core business operations.
- Leverage Our Two-Pronged Approach
- We’re owned by an attorney, Steven Raiser, which means we can seamlessly pivot to legal strategies if negotiations stall. Not all debt relief companies can offer that.
At every step, we have clear objectives with an aim to help you avoid going out of business. Many business owners think their only choice is to shut their doors, but that’s not always true. By negotiating strategically and handling creditors, we can often protect your cash flow while you continue operating.