Experiencing a personal injury can turn your world upside down, especially when bills keep coming, and your ability to earn is affected. If you’re in the middle of a legal battle, pre-settlement funding could be the financial support you just need. Yet, approaching this option with caution can avoid you pitfalls that could make the situation worse.
Here are key mistakes to steer clear of:
1. Not Comparing Your Options
Remember, not every legal funding provider is cut from the same cloth. Some offer competitive rates specifically tailored to personal injury cases like yours. Others? Not so much. That’s why it’s really important to explore various lenders to find one that understands the specifics of your lawsuit and can offer terms that let you keep a healthy portion of your settlement. Look for clear terms, especially those with capped rates, to hold on to more of what’s rightfully yours.
2. Skipping the Background Check
In a market that’s not federally regulated, transparency and trustworthiness are essential for a smooth and secure funding process. Take the time to research the lender’s history. A quick check for any financial misdemeanors or issues with agencies like the FBI can save you from partnering with a problematic pre-settlement funding company. If you uncover a history of questionable dealings, it’s wise to continue your search elsewhere.
3. Withholding Information
Holding back information or not providing what’s requested can hinder your application’s success. Settlement funding companies need specific details to make an accurate decision. Make sure your attorney provides all the necessary information to avoid delays or even undesirable terms. Complete transparency on your part helps secure funding under the best possible conditions.
4. Ignoring the Total Cost of the Loan
Be wary of lenders that advertise fixed fees or no interest rates, because those are the ones that typically hide them in the fine print. Some legal companies might offer contracts that seem like a low percentage rate, but if that rate compounds monthly, you could end up owing much more than you initially borrowed. Make it your priority to understand not just the rate but the total cost of the loan over time, including how interest compounds.
5. Not Reading the Fine Print
Before signing anything, thoroughly review all documentation to know exactly what you’re responsible for paying when your case settles. If there’s anything that’s unclear, ask questions. Knowing exactly what you’re agreeing to can help you avoid unpleasant surprises down the line.
6. Not Considering the Impact on Your Settlement
Be aware of how accepting a pre-settlement cash advance might affect your settlement. Taking a large advance might pressure you to accept a quicker, possibly smaller settlement because you’re worried about repaying the loan. Remember, your main priority should be on the fair resolution of your case, not only on meeting current financial needs.
7. Failing to Communicate with Your Attorney
Your attorney should be involved in your decision to seek pre-settlement legal funding. He or she can offer valuable advice on whether it’s a good move based on the specifics of your case and help you understand the terms and implications of any funding agreement.
8. Rushing the Decision
In the face of financial pressure, it might be tempting to jump at the first legal funding offer you receive. However, rushing this decision without tapping into other types of financial assistance can lead to costly mistakes. Ask friends or family for financial help, explore other options like loans or lines of credit, and carefully consider all offers before making a decision on pre-settlement legal funding.
9. Overestimating Your Settlement Amount
No lawsuit settlement is promised. Be realistic about the potential outcome of your case. Overestimating how much you might receive in a settlement can lead to borrowing more than you need, which can significantly reduce the portion of the settlement you keep after repaying the advance.
Why Choosing Carefully Matters
Pre-settlement funding can be a valuable resource while you wait for your case to resolve. However, the variety in lender reputability means you must be diligent in your selection process. By doing your homework and choosing a credible legal funding company, you can avoid common traps for your own financial stability during and after your lawsuit.
Consider Baker Street Legal Funding
With Baker Street Funding, you’ll find transparent terms, including capped rates after three years, no hidden fees, and non-compounding interest rates. Our lawsuit funding team is here to support you every step of the way so that you have the funds you need without compromising the future of your legal settlement.
Thinking about pre-settlement funding? Let Baker Street Funding guide you towards a solution that respects both your immediate needs and your case’s outcome. Apply today.
