Article by Lawsuit Funding
Pre settlement funding is a term that is used in the law markets as an advance against a pending lawsuit. This type of financing is being offered by hedge funds and private investors. Unlike a bank loan, pre settlement funding is a non recourse advance against a lawsuit. This means a plaintiff can be provided with an advance on a contingency fee basis. If they lose the case, they don’t have to repay the money back.
This financial tool is very unique. For instance, if you were to apply for a loan with a bank you would have to put up collateral against the loan. If you defaulted on the loan the bank could legally take the collateral. When you apply for pre settlement funding the collateral is the lawsuit. A person will agree to use the lawsuit as collateral and the lender will put a lien on the lawsuit. When the case settles the company will collect the principal plus interest. The remainder of what’s left over after the lien is collected goes to the plaintiff.
Rates are generally determined by the strength of a case. If you have a good case with clear liability, chances are the company will provide you with a better rate. The reason is there is less risk for the company. If the case is already settled, the rate should be much more competitive. The amount of money that you will payback will depend upon two things; how long does it take to receive compensation from the case and at what rate where you approved.
Again, if you are successful with your case will you be required to repay the lender. If you lose your case, you would owe nothing to the lender.
Prior to accepting funding from any lender, you will be given a rate schedule based upon the strength of your case. The rate schedule should include a clear schedule indicating the rate and time frames. The longer the lawsuit takes to settle the larger the payback.
Pre settlement funding should only be used by those individuals that can’t afford to stay afloat, while waiting for compensation. This tool can play an important role in getting fair compensation for your lawsuit. If you are dealing with an insurance company that won’t budge on a settlement offer, you can be provided with funding against the claim, in hopes for a larger settlement.
If you are considering pre settlement funding always consult with your attorney. You should find out what the estimate value of the claim and the expected settlement date. If you are nearing a settlement and you don’t have a pressing financial need, you should reconsider pre settlement funding.
If you are looking for more information regarding pre settlement funding visit LawLeaf.com today.
About the Author
LawLeaf is an online lawsuit cash advance company that that works with plaintiffs and attorneys.
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