Whether you were the victim of a debilitating car accident or out of work due to an on-the-job mishap, you may have found yourself in the middle of a lengthy court battle to determine if you should be awarded a structured settlement. If you’ve asked your attorney for some sort of resolution, they may have suggested applying for a pre-settlement loan, or as they’re sometimes referred, lawsuit settlement loans.
These are essentially case advances that are borrowed before your case is won and before a structured settlement award has been approved by the court. Though receiving a lump sum of cash before you settle sounds like a viable way to get money faster, it is important that you understand before you consider lawsuit settlement loans.
Risks Associated With Lawsuit Settlement Loans
When you’re in the middle of a lawsuit, you might feel like your life has been put on hold. Meanwhile, your creditors and lenders are expecting your debts to be paid—and on time. Utility bills, mortgages, and credit card debt will continue to accumulate even though you’re running out of money. Companies that offer lawsuit settlement loans prey on desperation, offering quick cash before your court case is settled. They’re counting on people like you to act rashly based on financial need.
Many companies provide lawsuit settlement loans ranging between $500 and $25,000, and a small number will offer up to six figures. You may be charged a flat fee or a monthly fee for each month between the time the loan is administered and the settlement date. Moreover, you will notice that the company will not call the loan a “loan”; it may be listed as a “cash advance”, “venture capital” or an “investment.” This is because organizations like these can charge higher interest rates, (15% or more).
Lender Criteria for Offering Pre-Settlement Loans
Lenders are aware of the high risk involved when providing lawsuit settlement loans before the plaintiff’s case is settled, so certain safeguards are in place to ensure they get their money. You won’t have to worry about lenders checking your credit or employment history, nor will you have to put up any collateral. Since the lender is taking a substantial risk, you are expected to foot the bill by agreeing to a high interest rate, and sometimes the rate is compounded monthly.
Lawsuit settlement loans on the surface appear to be a solution to get a cash advance on your structured settlement, but in reality, these loans could be costing you a fortune if you win. Reputable structured settlement companies like >RSL Funding doesn’t believe in putting their customers’ futures at risk with pre-settlement loans. Lawsuit settlement loans will take a significant portion of the money you’re entitled to. When you’ve won your settlement and you’re ready sell your structured settlement for cash, contact us for a free, accurate quote.
