5 Myths and Misconceptions About Pre-Settlement Funding
If you’re in the middle of a lawsuit and you’re struggling to get by, you may come across the process of pre-settlement funding. At Preferred Capital Funding, we provide plaintiffs with the money they need to pursue successful litigation with the help of an attorney.
The concept of legal funding can seem confusing initially, especially with the amount of misinformation about there. We’re going to debunk some of the most common myths and misconceptions about pre-settlement funding regarding legality, regulations, and the application process. Overall, it’s important to know that the funding we provide our clients with helps them move forward with their lives.
1) Legal funding is illegal.
The ideal that lawsuit funding is illegal is a common misconception. On the contrary, the process is completely legal. While defendants may feel as though funding companies are taking sides, this is not the case. Having access to money prior to your case settling will not improve your chances of winning – it will only help you get by until it’s all over.
2) Pre-settlement funding is unregulated.
Even when people know pre-settlement funding is legal, there are concerns regarding regulations. Lawsuit funding is becoming an increasingly regulated industry. Many of the existing regulations ensure the plaintiff’s best interests are protected. The American Legal Finance Association (ALFA) is the industry’s trade association. This organization establishes the highest standards and business practice principles for the legal funding industry.
While states are allowed to establish their own regulations, the ALFA encourages certain practices like including full disclosure agreements to clients, a five-day cancellation period, and a written review of agreement by the client’s lawyer.
When states establish regulations, they typically revolve around interest rate limits and loan term disclosures. State legislatures determine how much interest a lender can charge plaintiffs seeking funds. Additionally, the federal government establishes how funding companies disclose their terms, which includes how the interest rate is calculated, how much interest will be paid over the life of the funding, and what additional fees are included.
3) Lawsuit funding can only be spent on certain expenses.
When you file a personal injury claim, it’s likely you’re seeking economic and noneconomic damages. Economic damages refer to the calculable losses you suffered, like medical expenses, lost wages, and property damage costs. Noneconomic damages are harder to calculate because they take into consideration pain and suffering and emotional trauma.
You may think that you have to use your advanced funding to cover those expenses, and you’re more than welcome to. But you’re not limited to covering those losses. We understand that the litigation process can take a long time. While your legal team builds and proves your case, you have monthly bills to pay for. You can use your pre-settlement loan for rent, mortgage, bills, groceries, and more.
4) You’ll be in debt if you don’t win your case.
The funding we offer ranges from $500 – $500,00. The damages you’re looking to recover and the strength of your case will determine how much you receive from us. You may worry about paying us back after your case settles, especially if it’s not in your favor. Fortunately, pre-settlement funding is nonrecourse. This means that if you lose your case, you don’t repay us. We absorb the risk for you when you sign our contract.
When you win your lawsuit, we’ll receive payment in one lump sum from that amount. Your lawyer will likely handle the transaction for you.
5) The litigation funding process is complicated.
When you seek funding through Preferred Capital Funding, we do everything we can to simplify the application process. All you need to do is contact us. You can do this by phone or online. To start, we’ll ask for some basic contact information, the type of case you’ve filed, and how much money you’re requesting. We don’t need access to financial or job information. We don’t take factors like that into consideration.
We’ll also need a way to contact your lawyer. It’s important to remember that they need to be on board for you to be eligible. We’ll discuss the merits of your case with the law firm you’re working with. With that information, our legal underwriters will decide on how much money to give you. In some cases, you could have your funds in as little as 24 hours.
If you’re ready, submit an application today. Waiting for a lawsuit to settle could jeopardize your present and future economic state, especially if the case is complex. Pre-settlement funding can help you stay on your feet while you fight for the compensation you deserve.
