MERCHANT CASH ADVANCE
Debt Relief in Tennessee
Regain Control of Your
Receivables and Cash Flow

Trapped in the Merchant Cash Advance Cycle? You’re Not Alone — And You’re Not Out of Options​

 

​If your Tennessee business is suffocating under one or more merchant cash advances (MCAs), you know the feeling:

​

• Daily or weekly ACH withdrawals draining your account

• Balances that never shrink no matter how much you pay

• Aggressive calls, emails, and threats from MCA collectors

 

At EmergeLaw, we help overleveraged small and mid-sized businesses in Nashville, across Tennessee, and beyond break free from MCA debt. We use negotiations, workouts, and—when necessary—Chapter 11 or Subchapter V bankruptcy to stop the bleeding, protect your receivables, and keep you in control of your business.

 

Why MCAs Are So Dangerous for Tennessee Businesses

 

Merchant cash advances are marketed as fast, flexible financing. On paper, they’re “purchases of future receivables.” In reality, they function like ultra-high-interest loans with no regard for your ability to repay:

​​

• Daily or weekly withdrawals directly from your business bank account

• Factor rates (borrow $100K, repay $140K+) instead of interest rates

• No underwriting based on cash flow or repayment ability

• Personal guarantees tying your own assets to the debt

• Forum selection clauses forcing lawsuits in lender-friendly states like New York or New Jersey

​

What starts as a short-term fix for payroll or supplier emergencies often turns into a treadmill of debt that speeds up every day.

​​

The MCA “Nuclear Option”: Diverting Your Customer Payments

 

One of the most damaging and little-known tactics in many MCA agreements is the lender’s contractual right to go directly to your customers or clients and demand payment if you fall behind.

​​

Here’s how it works:

​​

1.  Your MCA contract assigns your future receivables to the lender. This gives them a built-in claim on money your customers owe you — before you’ve even earned it.

​​

2.  If you default, the lender can flip the switch. They send legal notices to your customers instructing them to send payments directly to the lender, bypassing you entirely. Overnight, your incoming cash flow can drop to zero.

 

3.  Some lenders take it even further. They will call or email customers directly — often using intimidating legal language — to pressure them into paying the lender instead of you. This can leave customers confused, alarmed, and wondering if your business is failing.

​

The damage is immediate:

• Your cash flow is cut off overnight.

• Your reputation suffers with valued clients.

• Customer relationships you’ve built for years may be permanently destroyed.

​

We’ve stopped this tactic every time we’ve confronted it. Chapter 11 and Subchapter V not only immediately halt all direct lender contact with your customers through the automatic stay, they restore your control over receivables and communications.

​​​

Confession of Judgment Clauses — And Why They Still Matter in Tennessee

Many MCA agreements contain confession of judgment (COJ) clauses, which let a lender obtain a court judgment without a trial.

​

In Tennessee:

• COJs signed before a lawsuit are generally void under state law.

• If signed after a lawsuit and service of process, they may be enforceable — but that’s rare.

​

The Real Risk:
Most MCA contracts also include forum selection and choice of law provisions that require disputes to be litigated in states like New York, where COJs are fully enforceable.

• That allows the lender to obtain a judgment out of state and then domesticate it in Tennessee.

• Once a judgment exists, fighting it here is costly and complex, and the burden is on you to prove a due process violation or other defense.

​​

Bankruptcy Court Levels the Field:
In bankruptcy court, you gain tools you don’t have in state court, including:

• Automatic stay to stop enforcement immediately

• Section 510(c) equitable subordination to reduce or eliminate MCA claims based on lender misconduct

• The ability to restructure or discharge MCA debts while keeping your business open

​​​​

How We Break the MCA Debt Cycle

​

We tailor the approach to your exact situation:

​​

One or two MCA lenders?

• We often resolve debts through direct negotiation or workouts without bankruptcy.

​​

Multiple MCAs or aggressive tactics like customer contact or COJs?

• Chapter 11 or Subchapter V provides immediate legal protection, freezes collections, and gives you the power to restructure or eliminate MCA debt.

​​​

Why Chapter 11/Subchapter V Works for MCA Debt:

• Stops withdrawals, lawsuits, and customer contact

• Lets you keep operating your business

• Allows debt reduction or elimination while preserving equity

​​​

Serving Businesses Across Tennessee

​

From Nashville to Memphis, Knoxville to Chattanooga, EmergeLaw is Tennessee’s go-to law firm for merchant cash advance debt relief. We appear regularly in the U.S. Bankruptcy Court for the Middle District of Tennessee and have resolved MCA debt for businesses statewide.

​​​​

​​​

Frequently Asked Questions About MCA Debt Relief in Tennessee

 

Q: Can MCA lenders contact my customers?
Yes — many MCA agreements give lenders the contractual right to notify your customers and demand payment directly if you default. This can cut off your cash flow overnight and damage relationships. In Chapter 11 or Subchapter V, the automatic stay stops this immediately.

​

Q: Are confession of judgment clauses enforceable in Tennessee?
Generally, no. Tennessee law voids most COJs signed before a lawsuit. But most MCA contracts include forum selection clauses requiring disputes to be litigated in states like New York, where COJs are enforceable. Lenders can use those judgments against Tennessee businesses unless you act quickly.

 

Q: How can I stop daily withdrawals from my business account?
If negotiations fail, filing for Chapter 11 or Subchapter V bankruptcy stops MCA withdrawals immediately through the automatic stay, giving you room to restructure your debts.

 

Q: Will bankruptcy ruin my business?
No. Chapter 11 and Subchapter V are designed to let businesses keep operating while restructuring debt. The business continues serving customers and paying employees during the process, and in most cases, the business keeps all of its assets and the owners keep their equity.

 

Q: Can I negotiate MCA debt without filing bankruptcy?
Yes — especially if you have only one or two MCA lenders. We often negotiate settlements or workouts that reduce the balance and spread out payments without a bankruptcy filing.

 

Q: How fast can you stop MCA collections?
If Chapter 11 or Subchapter V is the right choice, legal protection begins the moment your case is filed. Collections, withdrawals, and customer contact must stop immediately.

​​

 

There’s No Shame in MCA Debt — But There Is a Smart Way Out

 

You made the best choice you could at the time. Now it’s time to make the right choice for your future:

​

• Stop the daily debits

• Reclaim your receivables

• Protect your business and relationships

​

Contact EmergeLaw to take the first step toward freedom from MCA debt.