Merchant Cash Advances (MCAs) have surged in popularity among New Jersey small businesses seeking fast capital. However, their structure—as purchases of future receivables rather than traditional loans—often bypasses usury restrictions and comes with high effective costs. When repayment schedules (daily or weekly) become untenable, businesses may only have one option: negotiating a loan workout while [...]
Understanding DIP Financing When a business files for Chapter 11 bankruptcy, it doesn’t have to stop operating. In fact, many companies continue their daily operations while restructuring their debts. This is possible because of a special type of funding called Debtor In Possession (DIP) financing. DIP financing is a unique loan available to businesses that [...]
For an overview of recent changes affecting student loan borrowers and wage garnishment, read this article from The Hill.
The Bankruptcy Code sets specific limits on the amount of debt that a person can reorganize in a Chapter 13 bankruptcy. There are separate limits for both secured debts and unsecured debts. These debt limits are calculated per each debtor where a married couple files a joint chapter 13 bankruptcy case. These “debt limits” [...]
A merchant cash advance (MCA) is not a traditional business loan. MCA companies offer struggling businesses a lump sum of cash in exchange for the business' accounts receivables, meaning its cash flow. MCA companies will take a daily percentage of the business' revenue and/or its credit card sales directly from its bank account and/or merchant [...]
Failure to pay tolls, fines and penalties associated with an E-ZPass a/k/a/ EZPass account can quickly result in skyrocketing and compounding debts. The majority of EZPass debts are made up of fines and penalties associated with not paying the relatively small underlying toll. These EZPass debts may have resulted as a result of defective [...]
T he “automatic stay” in the Bankruptcy Code operates to stay collection actions, service of process, lien perfection, and judgment enforcement, upon the debtor’s filing of a bankruptcy petition. 11 U.S.C. §362(a). The automatic stay prevents creditors from repossessing cars or taking other actions with respect to their collateral. But what happens if a [...]
T echnically, citizenship, immigration status, lack of documentation, or even the lack of a social security number does not determine a person’s eligibility to file personal bankruptcy, or for them to seek bankruptcy protection for their company. The Bankruptcy Code specifically defines who can file bankruptcy, i.e., who can be a “debtor.” Section 109(a) [...]
Last year Congress passed the Small Business Reorganization Act of 2019 (SBRA), which amended the Bankruptcy Code to make it easier for small business to reorganize. The SBRA went into effect in February 2020, which was timely considering the coronavirus pandemic which began damaging the economy and squeezing small businesses in March 2020. Until February, [...]
On March 27, 2020, Congress passed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). Section 1113 of the CARES Act includes notable, temporary changes to the Bankruptcy Code. The Small Business Reorganization Act On February 19, 2020, the Small Business Reorganization Act of 2019 (SBRA) became effective and added a new subchapter [...]
