May, 2020 – GPL Newsletter – Volume 2 Issue 1
We are delighted to bring you the May issue of
CREDIT CORNER and MCA CAFÉ
STAY INFORMED ON DEVELOPMENTS IN:
CREDIT CORNER NEWSLETTER
“GET RID OF DEBT – BANKRUPTCY – DEBT RELIEF – SETTLEMENTS – CREDIT REPAIR – GARNISHMENTS – STUDENT LOANS.”
In this issue:
1. Create a Budget in 3 Minutes.
2. What is the Cost of Filing Bankruptcy Chapter 7?
3. Can I File without an Attorney?
4. How Much Do I Need to Put Down to Start a Chapter 7?
5. Declaring Bankruptcy – What does it mean?
6. 6 tips to Increase your Credit Score.
7. What makes up my Credit Score?
THE 3 MINUTE BUDGET
Creating a budget can feel overwhelming and boring. So we created the 50/30/20 Budget. This is how it works:
Take 50% of all your net income (wages, commissions, investments, social security, trusts, stocks or any other form of
income and money you receive), the 50% is after tax money. This money should be used for your NEEDS such as rent
mortgage, food car gas electricity student loans copays clothes and anything else that is NEEDED IN ORDER TO LIVE.
Next, take 30% of all your net income and use to cover your WANTS, for example vacations, jewelry, restaurant food,
fancy clothes, electronics, Starbucks and all other expenses that you would like, but that are NOT NEEDED TO LIVE.
Finally, the remaining 20% of all income should be put away for SAVINGS. There is nothing like having money for a
“rainy day.” Try to save as much as possible and aim for 20% of all your next income.
The “3 Minute Budget”
WHAT IS THE COST TO FILE CHAPTER 7 BANKRUPTCY?
How much does it cost to file a Chapter 7 bankruptcy?
1. Mandatory Court Filing Fee – $335.00
2. There are two mandatory credit and budget courses to take over the phone – $20.00
3. Attorney’s Fees: Ranges from $1,500 to $2,000, depending on case complexity.
[Mention this Newsletter and receive an instant $200.00 discount on a Chapter 7 Bankruptcy]
WHAT IS THE COST TO FILE CHAPTER 13 BANKRUPTCY?
How much does it cost to file a Chapter 13 bankruptcy?
1. Mandatory Court Filing Fee – $310.00
2. Attorney’s Fees: Ranges from $3,000 to $4,500, depending on case complexity.
CAN I FILE BANKRUPTCY WITHOUT AN ATTORNEY?
Yes, you have every legal right to file bankruptcy without an attorney (Pro Se). However, the success rate is very low
compared to debtors that hire an attorney. Let’s review the numbers: Of the Chapter 7 cases filed Pro Se, only 46% of
these filings are allowed by the Courts. More than half of those filing alone, don’t get rid of their debts and their cases
are dismissed. With an attorney, the success rate for a successful bankruptcy filing jumps to 97%.
HOW MUCH MONEY DO I HAVE TO PUT DOWN TO BEGIN?
$100 – At Grant Phillips Law, we understand times are extremely hard. The Coronavirus has hurt millions of hard
working Americans. We want to help. We want to give back to our community and so to start a Bankruptcy Chapter
7 case for $100.
FOR $100 WILL YOUR LAW FIRM STOP THE COLLECTION CALLS AND HARASSMENT?
Yes, at Grant Phillips Law, $100 makes you a formal client. You are free to let ALL your creditors and debt collectors
and collection lawyers that you have hired an attorney and give them our number. Let us deal with your creditors.
You work on rebuilding your life. Our law firm will stop all your creditors from contacting you again by phone, text
and letter. We are here for YOU. Let us alleviate your stress.
“The Coronavirus has destroyed countless lives and left many without jobs and savings.
We all have a responsibility to help our fellow citizens and neighbors.”
WHAT DOES IT MEAN TO “DECLARE” BANKRUPTCY?
To file bankruptcy and declare bankruptcy is the same thing. Bankruptcy is a legal process created to eliminate debt
and provide a fresh start to debtors. The process formally and legally begins with the official filing of the necessary
paperwork with the local bankruptcy court. Once filed a case number will be generated. At this time the debtor has
formally declared bankruptcy. They have put their creditors, the court and the world on notice that they have filed,
declared or lodged a bankruptcy filing. According to the dictionary, declare means “to make known formally.” Thus,
when filed, a bankruptcy is “known” and the debtor has declared bankruptcy.
6 TIPS TO INCREASE YOUR CREDIT SCORE:
1. EARLY AND FULL – Pay your credit card balance each month in full and before you receive the bill in the
mail. For example you have a credit card and right now you owe $50 and the payment is due in 2 weeks.
Make the payment TODAY for the FULL $50 and your score will rise very quickly.
2. SLOW AND EASY – Rebuilding credit is not as difficult as it seems. Time & Tips will increase your scores.
3. SECURED CREDIT CARD (REPORTING AS CREDIT CARD) – Obtain a Secured Credit Card. This is a credit card that
takes the money it extends to you and keeps it in “escrow” in case you default. There are secured credit cards
that work this way BUT that REPORT TO THE CREDIT AGENCIES like it is an actual credit card. This helps
your score as you can get a secured card for $100 credit and use it 1 time a month to buy a soda for example
and pay on time and in full and the payments will be reported as Credit repayments and increase your score.
4. DON’T PAY – PULL YOUR FREE REPORTS – if you need to look at your credit, try to obtain those copies you
entitled to free every year from the credit agencies. They are free. Before paying a company, look for the free
credit reports you are entitled to from Experian Equifax and Transunion every year.
5. EXPERIAN BOOST – Go to the Experian Website. Search for “Credit Boost” this is service offered directly from
Experian to increase your score by at least 10-15 points. At the time of writing this, the service is free.
6. On-time payment history is the most important factor in your credit score, accounting for 35% of your total
score, according to FICO. Pay on time!
WHAT MAKES UP YOUR CREDIT SCORE?
1. Payment history, is 35% of your score, and includes your history of repaying account debts.
2. Credit utilization, is 30% of your score, it shows your credit usage versus your credit limits.
3. Length of credit history is 15% of your score. It shows how long you’ve had active credit accounts.
4. Types of credit, is 10% of your score, and shows the variety of your accounts.
5. Credit inquiries, is 10% of your score it shows the number of inquiries made to your credit profile.
MCA – CAFÉ
MERCHANT CASH ADVANCE
Updates and News.
In this issue:
1. What is a Merchant Cash Advance?
2. Alternatives to MCA Loans.
3. Why an Attorney is Best Suited for Settling MCA Debt.
4. Reconciliation Clauses – What to Know.
WHAT IS A MERCHANT CASH ADVANCE?
Beginning early 2010, after the Great Recession, when the American housing market blew up, traditional banks for
example, Chase, Wells or Citi were unwilling to extend loans to small businesses. While the global housing and financial
markets recovered, both self-regulation and Government regulation over conventional banks, meant that small
businesses were unable to obtain loans, financing and credit to help their businesses.
In other words, post the Great Recession, the standards for lending by traditional banks were so cumbersome and difficult,
that small businesses were unable to meet the banks “new” underwriting standards, leaving small business with very little
choice for financing and borrowing.
The void in small business lending post the Great Recession lead to the creation of SMALL BUSINESS, HARD MONEY
LOANS, giving birth to the “Merchant Cash Advance.” (MCA)
An MCA is a small business loan extended against the future credit card and account receivables of the small business.
The MCA industry has grown year over year. Unfortunately the current State Laws permit anyone to become an MCA
Lender. There is no licensing or regulation. State laws do nothing to protect small business and their owners from these
treacherous loans. These loans are permitted to charge ANY AMOUNT of interest they like! Sadly, it is also “Legal” and
not considered usury because the purchase of future receivables is not considered a loan by the law and only a loan is
subject to State Usury Laws. It’s a full decade later and the MCA industry remains unregulated and the Wild West.
Respectively, this law firm states “Do not take out an MCA loan for you will not be able to afford the daily payments
and interest and it can destroy your business.”
“Do not take out an MCA Loan for your business, it is highly likely you will not be able
to afford the daily payments and interest and the MCA can destroy your business!”
ALTERNATIVES TO MCA LOANS *
* Please note Grant Phillips Law has no affiliation with any company or product listed in this newsletter and any mention thereof, is for informational purposes only and not an endorsement of any kind. Do not rely on any company or product mentioned in this newsletter.
1. Lendio is a reasonable resource for small business owners who want to apply to a large number of lenders with
a single application. Think of the company as a matchmaker for small business borrowers and small business
lenders. Generally, after filling out a single application, Lendio will shop your loan request to 65+ lenders. Please
note that Lendio works with affiliates and partners, thus you should ask for a recap and summary of all offers
and be sure that what you select is indeed a CONVENTIONAL loan. Steer clear of anything with fine print and
anything that references “receivables.” If you require assistance in determining the type of loan and the fine print
surrounding it, call Grant Phillips Law.
2. StreetShares Originally founded by veterans for veteran owned businesses, today StreetShares is available to
non-veterans. StreetShares offers business financing that includes term loans and lines of credit. Make sure to
ask and receive the ACTUAL APR on any product you consider. Steer clear of their factoring products and
never enter into a Merchant Cash Advance type loan. Be sure there is NO mention of “receivables” and that
your repayment is MONTHLY. This law firm has seen term loans of up to 36 months and APRs on both lines of
credit and term loans ranging anywhere between 7% and 30%.
3. Fundation offers term loans and lines of credit for small businesses. Although more difficult to qualify for,
Fundation has competitive rates. Fundation term loans have a maximum borrowing amount of $500,000 and
lines of credit max out at $100,000. APRs for both products fall between 7.99% and 29.99%.
4. Small business Administration Loans (SBA) simply, an SBA loan is a small business loan that is partially
guaranteed by the Government. Due to this government guarantee, (think of it like an insurance policy from
the SBA to the actual SBA lending bank that if the borrowing business fails and the loan goes delinquent, the
lending institution will receive up to 80% of the loan provided back from the government) Due to this
government created “repayment insurance,” lending banks are able to provide highly competitive interest
rates to qualified small businesses. This is because the government backing eliminates some of the risk for the
financial institution who is issuing the loan. In turn they will lend to qualified borrowers at the lowest interest
rates in the industry. Be aware, it is not the SBA who is doing the lending. The SBA works with a network of
approved financial institutions (typically, traditional banks) that lend money to small businesses.
5. SmartBiz uses technology to speed up the process of applying for an SBA loan for working capital, debt
refinancing and equipment or real estate purchasing. SmartBiz will not eliminate the paperwork required to
get an SBA loan, however it speeds up the process by allowing borrowers to see if they qualify for a SBA
backed loan in as little as a few minutes. SmartBiz also assists borrowers to assemble a complete SBA loan application package. Please note, SmartBiz may speed up the application process, but you and your business are still required to meet SBA borrowing requirements. If you’re eligible, you’ll have a hard time finding rates better than those offered by the SBA.
WHY A QUALIFIED ATTORNEY IS BEST SUITED TO SETTLE YOUR MCA LOAN
A qualified MCA Attorney is best equipped to bring total and lasting relief from the strangulation of Merchant Cash
As a law firm licensed & practicing in Florida, New York and New Jersey, with a focus on settling or litigating against Merchant Cash Advance loans (MCA), we are receiving more and more clients, who were once signed into a debt settlement program, allegedly focused on eliminating their MCA loan(s). These so called debt settlement companies are not attorneys and not law firms, yet unknowing clients desperate to receive some relief from the burdens of an MCA, sign up for one of these programs, only to find out later that no work was performed or that the Merchants lender refuses to deal with the “debt settlement company.” Worse yet, when the Merchant realizes what has transpired, it is usually too late, as they have already paid exorbitant sums of money to these surreptitious companies, but their MCA debt was not settled or dealt with. Many of these non-attorney practitioners fail to inform Merchants of their limitations, instead choosing to “roll the dice” with the Merchants Business.
Most MCA funders have internal or outside attorneys that represent their interests. A qualified attorney can negotiate with the funder’s attorney on equal terms and with knowledge of the law and the nuances involving an MCA loan. On the other hand, a non-attorney is legally prohibited from giving legal advice, do not understand the law and or the funders attorney refuses to negotiate or communicate with such companies. These companies also fail to inform the Merchant that their “services” are merely a negotiation and not a legal one at that and that the funder or their attorneys and or their collection agencies have no obligation to communicate at all with the settlement company. They don’t know or intentionally fail to inform the Merchant about forgiven debt and the IRS tax consequences. The last straw is when these debt settlement experts instruct the Merchant to stop paying or to change credit card processors and or bank accounts! These “instructions” are all breaches of the MCA contract. No qualified attorney will instruct you to breach a contract. Rather with experience, skills and the necessary legal knowledge your MCA attorney will work with the funder to resolve each issue methodically. Despite the plethora of problems that exist with using non-attorneys to settle a Merchant Cash Advance, the clandestine settlement companies are signing up thousands of unassuming hard working Merchants on a daily basis.
An experienced and qualified MCA attorney and law firm know the intricacies of an MCA loan and the law governing its mechanisms. Accordingly, if any illegalities exist, the attorney can litigate against the funder if necessary. This law firm has litigated and sued many funders for breaches of the law and contracts. Whereas a non-attorney debt
settlement company cannot engage in a lawsuit. Provide no fiduciary obligations to the Merchant and are free to do as they wish with the Merchants positions and so called settlement money. They do not know the law. They are unlicensed and cannot sue or enter legal negotiations for the Merchant.
RECONCILIATION CLAUSES – WHAT TO KNOW
Every Merchant Cash Advance contract should include a Reconciliation Clause. This is a mechanism whereby a
merchant can seek to have the actual receivables reconciled with the daily percentage the funder takes from the
receivables and the fixed daily amount of money to be debited. If the daily percentage and daily fixed payment
amount exceed the actual receivables, such a clause instructs the funders to lower the Merchants payment in
proportion to the actual receivables.
The reason for its inclusion is to satisfy the legal requirement that a bona fide MCA loan is not repayable absolutely. In
other words a legitimate funder will not require the Merchant to repay irrespective of circumstance. Rather, by
including a legitimate Reconciliation Clause in their contracts, with genuine intention of fulfilling it, if it became
applicable, the payment is not absolute and a reconciliation is possible. Even if the contract contained a true
reconciliation clause, it would be a moot point if the funder did not honor it. Be careful many contracts only allow for a reconciliation if the Merchant is current on their account.
Let the attorneys here at Grant Phillips Law review your MCA contracts for any illegalities and discrepancies
We are delighted to inform you of our latest legal victory in the fight against Merchant Cash Advance abuses. In
April 2020, Grant Phillips Law was retained for a possible case of fraud. After investigating the matter, we
decided to sue twelve different MCA funders on behalf of our merchant client. Using our years of experience
and legal acumen we obtained an out of court settlement that exceeds $1,000,000.00
WE HOPE YOU ENJOYED THIS MONTHS EDITION OF CREDIT CORNER & MCA CAFÉ
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670 Long Beach Boulevard, Long Beach, NY 11561 (516) 670-5165