Behind on an Advance and Worried About a Lawsuit?
This is the window where you have the most leverage, and most business owners spend it doing nothing because they are hoping the problem resolves itself. It does not. But the position you are in right now is considerably better than the one you will be in after a lawsuit is filed.
Why this window matters
Litigation costs your funder money too. Filing suit means legal fees, time, and the real possibility of collecting nothing at the end of it. Before they have spent that money, many funders are more willing to discuss a resolution than they will be later.
Nothing is on a court schedule yet. Once a case is filed, you are working against deadlines set by a court. Right now the timeline is still negotiable.
Your record stays cleaner. A filed lawsuit is a public record that can follow your business and affect your ability to get financing later.
Signs a lawsuit may be coming
- Collection calls change tone, or move from the funder's staff to a law firm.
- You receive a formal demand letter, especially one with a deadline in it.
- The funder stops offering payment arrangements and starts referring to acceleration or to the full balance.
- You are asked to sign new documents quickly, under time pressure.
- Notices go out to your customers or your payment processor.
What to do in this window
Do not stack another advance on top. It is the fastest path from a difficult situation to an impossible one.
Do not make a partial payment or sign anything without understanding what it does. Some documents presented as relief actually restart terms, add a guarantee, or waive rights. Have someone read it first.
Do not go silent. Disappearing removes the funder's reason to negotiate and often accelerates the decision to file.
Do get your total picture in one place. Every position, every balance, every payment amount, every funder. You cannot negotiate what you have not counted.
Do move now rather than later. Every week that passes moves you closer to the point where your options narrow.
If you are reading this before anything has been filed against you, you are in a better position than most of the people who call us. That is worth acting on while it is still true.
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