The facts that every person considering a lawsuit loan or advance should know about and consider before applying are important. Understanding how litigation funding works, helps to make the right decision about lawsuit funding. Terms used for this type of funding are, pre settlement loan settlement loan, lawsuit loan, case loan, lawsuit cash advance, plaintiff cash advance, litigation funding or finance, lawsuit funding, legal finance, legal funding lawsuit cash, personal injury funding and so on. Lawsuit funding is available in many types of cases.
1. Do not think of an advance to solve all cash flow problems, and understand that an advance is not another way to get cash for a settlement. It is an advance to enable the plaintiff to meet expenses until the case settles either in or out of court.
2. Litigation funding is not really a "loan". It's a cash advance based on the strength of the case that an investor of a litigation case is willing to advance on the possible successful outcome of the case. Companies that do these types of advances, invest in the lawsuit itself, rather than advancing cash to plaintiffs in the form of a loan. These are non recourse advances, which mean that if there is no recovery in the case, the plaintiff is not reponsible to pay back the advance. Plaintiffs only pay back the advance if the case is successful. Attorneys take these cases on a contingency bases, and they too, only get paid if the recovery is successful.
3. Lawsuit loans do not require credit checks, employment, or bankruptcy status. They are based strictly on the strength of the case. There are no risks for the plaintiff and no monthly payments to be made as with traditional loans.
4. Although similar in what they do, each company is different, and charge fees and interest differently. Because lawsuit finance companies take on a lot of risk on these cases, the interest rates will vary depending on the amount of risk involved in the case. Even good cases can sometimes be thrown out by the court, and called "frivolous." With this in mind, investors charge high rates on successful cases in order to make up for the cases that are not successful.
5. Fees asocciated with lawsuit finance are different with each company. The fees include: underwriting, origination, and multiplier fees. Some also have documentation, closing, and premature pay-off fees. These fees are added to the amount of the payback, and are based on how long it takes for the case to settle. Be sure to check with each company for their terms before applying. As with traditional types of loans, certain fees apply.
6. Use alternative funding whenever possible, because lawsuit loans can be expensive. Traditonal funding sources, do however, require monthly payments which can also put a real strain the budget.
7. Investors will advance up to 10% of what they feel the case is worth, and will talk with the attorney to help determine the viability and value of the case.
8. When cases are not approved for funding, it doesn't mean that it isn't a good case. It just means that investors are not interested in the case. Sometimes the case is not worth what the plaintiff is asking for in an advance, or what the plaintiff feels the case is worth. Funders determine the amount they are willing to invest, sometimes less than what the plaintiff requests.
9. Other reasons for a denial are the unwillingness of the attorney to either supply the necessary information, or sign the agreement to put the lien on the recovery. Sometimes, in cases with previous advances, the investors are not willing to go any more on the case because they feel the case is maxed out.
10. When approved for funding, a written agreement is signed by the plaintiff and the attorney puts a lien on the successful outcome of the case. Cash is received in 24-48 hours of the investor receiving the executed agreement.
In conclusion, plaintiffs applying for a lawsuit advances, should understand the process and make the decision if that is the best for them. This way, they won't be disappointed if it wasn't what was expected.
Author:
Linda Hughes is the founder and president of Freedom First Funding, and is a full service legal funding broker, experienced in helping plaintiffs thoughout the US, obtain advances on their pending lawsuits. Freedom First Funding is not a direct lawsuit lending company, but is an independent third party that works through a network of national companies. We cut the stress of applying to multiple companies for both the plaintiff and the attorney.
360 892 6667 TF: 877 386 3374
http://www.freedomfirstfunding.com/
Posted by My Business Life lj at 7:34 AM
Labels: lawsuit cash advance, lawsuit loans, pre settlement funding
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