What You Should Know Before Applying for Pre-Settlement Funding
You seemed to have been doing just fine in life until that drunk driver runs over you one evening when you were just coming from work. You have tried your best to keep afloat financially, but since you have lost the ability to work and you have seemingly exhausted all your finances, including asking from friends and relatives, and you can’t tell when your case will be settled – though you have a very solid case, you are thinking about pre-settlement funding to get the funds you need so that life may not come to a halt on you. Indeed, such loans have always come to the rescue of many, and if you are thinking that perhaps now would be the time to go for one, here are a few things you should know about them to help guide your decision.
Understand how lawsuits loans work
The applications process for these loans is relatively simple and doesn’t involve a lot as is usually the case when applying for loans from the traditional lenders such as banks. The plaintiff will submit a lawsuit application form to the lending company, who will then review the application and communicate their decision to the plaintiff in a couple of days. Once a decision to give the loan is made, the plaintiff will be presented with an offer with the all the terms and conditions, which he/she has the liberty to accept or reject. In case they accept the terms of the loan, the contract will be signed and then carried out.
A lawsuit loan should be a last resort, a loan you go for when you are literally drowning in a sea of debt and you don’t have any other source of funds. This is because the loans come with sky-high interests rates and most companies compound the rates on a monthly basis, making them exorbitantly expensive than any other loan you may ever think of. Therefore, before you make the decision to research for a lawsuit funding company, ensure you have tried every other avenue you can think of and these include bank loans if you have a good credit score, home equity loans, your 401K savings, and friends and families. Most importantly, if you really have to go for this loan, be certain that you already have a plan of how you are going to spend the money. It is an expensive loan and you should never falter on how you intend to spend it.
Consult with your lawyers
Your attorney has a good understanding of the merits and demerits of your case and they are in a good position to give you solid legal advice on whether or not you should proceed and make application for the loan. And since they have been in the industry for a while, they probably knew of good funding companies that might be willing to work with you. In case you have any doubts about the loans and their potential consequences, your attorney will be in a great position to explain to you everything you may wish to know.
Apply for the funding after your case has taken off
Most of the legal funding companies will be reluctant to give you any money until after 90 days after the incident happened. This is like a rule of thumb in the industry and it is to allow time for your case to develop so that its value may become clear. In most of the instances, the funding companies will be willing to provide loans of up to 10% of what they believe to be the value of your case.
Some of the factors they will consider while reviewing your application include the police report on the incident, the insurance limits for your case, and an overview of the current and expected medical treatment amongst others. Therefore, you should make the application only when your case has taken off and it would be possible to estimate its value.
Take as little as possible
When applying for pre-settlement funding, your aim should be to go for the least possible amount. Legal funding is naturally expensive and this is not the kind of money you would like to get for fun. Should you run out of money before your case is settled, you are always free to go back and ask for an additional advance. Depending on the company and the terms you agree to, it is possible to make arrangements so that you will be taking just a specific amount of money every month to meet your most pressing needs.
Read reviews about the legal funding company
Be warned that you will not find every past client heaping positive reviews on the legal funding companies because they are generally not liked due to the high interest rates. But nonetheless, you should take time and go through the reviews posted by previous clients. In as much as some may be very damaging to the company, you will find also good ones and ultimately, you will have an idea of what to expect when you take a loan from that company. Go through as many reviews as you possibly can and also check out a couple of companies. Don’t just work with the one you first encounter. Shop for it as you would normally shop for an expensive item online.