Why Standard Repayment Models Aren’t Ideal for Lawsuit Loans
When a preventable accident happens and someone is injured, personal injury law gives them the opportunity to seek compensation for their losses. While this process can result in monetary recovery for injured victims, it can take a long time to reach the finish line. While legal representatives work diligently to build and prove lawsuits, plaintiffs are often left to wait out the process. Depending on their situation and injuries, they may not be able to return to work for some time. As a result, it’s not uncommon for plaintiffs to experience financial trouble during the pursuit of a lawsuit. Fortunately, there are funding options.
While you may automatically think of personal loans and banks when you think about borrowing money, that is not the only option for those in the midst of a legal battle. Lawsuit funding exists specifically to help personal injury victims stay on their feet while pursuing a case. When you seek pre-settlement funding, you could have access to the money you need in only a short amount of time. One of the first questions you probably have, however, is how repayment works.
Paying back a legal funding company is a fairly simple process, but standard repayment models aren’t ideal for lawsuit loans. Let’s take a look at why.
How Standard Repayment Models Work
One of the most common forms of receiving funding for unexpected expenses and major life events is taking out a personal loan from a financial institution. In most cases, personal loans can be used for just about anything. If you’re in the middle of a lawsuit and you’re having trouble paying your monthly expenses because of looming medical debt and the insurance company or hospital isn’t willing to work with you, you can use the funding to wipe out the debt and afford your bills. This can prevent the bills from being sent to collections and affecting your financial health and future.
Most personal funding is unsecured, which means you won’t have to put collateral down. Lenders can take other collection actions if you fail to make payments, however. These include reporting late payments to credit bureaus, hiring a collection agency, or filing a lawsuit.
There’s also the matter of interest and fees. Interest rates are typically based on your credit score, so if your score is low you could end up considerably more back in the long run.
When it comes to setting up repayment, there’s typically an agreed-upon repayment period that could range anywhere from 12 to 60 months. Making those monthly payments is crucial.
Paying Back a Legal Funding Company
Standard repayment models don’t work well with legal funding. We don’t want to complicate your future with interest when you could move on from the lawsuit one it’s over. The process for paying back a cash advance is much simpler.
When a plaintiff applies for funding, gets approved, and receives the cash they need, they pay the funding company back when they receive their settlement or verdict. In most cases, the compensation check will go to the lawyer and they will divide it out to cover their fees, pay the pre-settlement lender, and send the plaintiff a check for the rest.
While terms and conditions vary depending on state law, there’s the potential for your funding to be non-recourse. This means that in the event you lose your case, you won’t have to pay the funding company bank. You won’t find this condition when you borrow money from a bank.
Contact Preferred Capital Funding
If you believe your situation warrants a lawsuit loan, there are some steps you can take to get your application going. Before doing anything else, discuss the option of funding with your lawyer. For us to be able to work with you, your attorney needs to be on board and willing to discuss the details of your case with our underwriters.
Once they’re on board, you can submit your application online. We only need some basic contact information and how much you’re requesting. When you speak with your legal representative, they’ll help you determine how much to request.
Our funding experts will look at your application, speak with the law firm you’re working with, and determine the chances of your case being successful. If the risk is low enough and your application checks out, you could have your cash advance in as little as 24 hours.
At Preferred Capital Funding, we understand the challenges that come with pursuing a lawsuit. That’s why we offer pre-settlement funding in numerous states all across the country and ensure the repayment process is as simple as possible. Speak with one of our representatives today.