A Pre-Settlement Funding is a financing option that has gained popularity in recent years for both borrowers who are settling their personal injury lawsuit, and for the financial institutions who facilitate this process. The concept behind pre settlement funding is to offer the plaintiff a lump sum of cash on the winning party’s maturity date, which is typically a year after the lawsuit has been brought. While this financing option is attractive for plaintiffs who have little money to invest and would need some quick funding, it can be quite risky as well. Most of the funding comes from private investors or entities that are willing to purchase the settlement loans in order to sell them to nursing homes or other medical finance institutions. Because these institutions require a large down payment to secure the loan, and since they are required to hold the loan for a period of time, they can raise the amount of the advance much higher than the actual value of the settlement loans.
This is why this company will often require a significant down payment. If the loan is not paid back on time then the investor who provided the advance may also foreclose on the plaintiff’s home or other property. Another risk associated with this type of financing is that the expected settlement amount may not be sufficient to cover the outstanding balance. In addition to these risks, pre settlement funding companies can often impose very high interest rates on these types of loans. Most times, these loans must be repaid in a single lump sum.
It is important that the funding companies take great care when evaluating pre-settlement loans. These companies should focus on only those loans that are secured by real property or other tangible assets that can be liquidated should the plaintiff become unable to make his/her monthly payments. Non-secured forms of funding should not be considered. One of the most common reasons for obtaining pre-settlement funding is to reduce the cost associated with litigation. As previously stated, there are risks associated with this type of financing, but if the goal of the funding company is to reduce the cost of litigation then it may be the best form of financing available to the plaintiff.
There are also some significant advantages associated with pre-settlement advance loans. First, these types of loans do not require the same type of financial documentation that is required for most traditional types of lawsuit financing. Also, the amount advanced does not have to be paid back until the case has been resolved. Because the funding company assumes little risk in providing this type of financing, the interest rates are typically quite low. Also, because pre-settlement advance companies assume little risk in providing this type of funding, they typically do not impose the same terms and conditions on the borrowers that traditional loan companies might.
Of course, the greatest benefit associated with this form of funding is that it provides cash immediately. Unlike pre-settlement loans, which often provide only a small amount of money, lawsuit loans are able to provide plaintiffs with the cash they need to ensure the successful resolution of their case. Because most pre-settlement loan firms do not provide post-settlement funding to their clients, plaintiffs who receive advance funding from outside sources rarely have to worry about repayments until their case is resolved. Moreover, most plaintiffs who obtain post-settlement funding do not have to repay their advance money until they receive a percentage of their money. Because many plaintiffs cannot afford to repay their advance payments when they receive them, most plaintiffs find that obtaining post settlement funding can allow them to avoid the repayment of their advance payments.
There are several well-known pre-settlement loan companies who do business throughout the United States. Many of these companies are well-established and experienced, and they have developed relationships with a large number of different attorneys. Therefore, it should not be difficult for any attorney who represents a client who has obtained an advance to be able to find a pre-settlement loan company that he or she can work with. It should be possible for any attorney to obtain one of these settlement loans even if the client has not yet received his or her lawsuit loan award. Please view this site: https://www.huffpost.com/entry/lawsuit-loans-add-big-ris_n_809882 for further details on the topic.