Many personal injury plaintiffs in America require funds to be able to pay their rent, utilities, gas, and all the other expenses that continue as a result of their injuries.
No matter what happened to you that led you to file a legal claim, pre-settlement funding may be exactly the solution you need. However, in the midst of the desperation of the search for funding that could be right for you, some things can go wrong.
When you’re ready to take the leap in obtaining funding for your legal case, caution and care are necessary to ensure you are not swindled by one of the many disreputable players in this industry.
Here are four pre-settlement funding mistakes you might want to avoid:
1) Not shopping around for lenders
Not every pre-settlement funding lender is going to offer the most competitive terms. Some lenders may simply charge higher interest rates or fees than others, whereas others may specialize in certain types of lawsuits.
If you were involved in a car accident and are the plaintiff in a personal injury lawsuit, then you would want to obtain a cash advance on your settlement from a lender that understands these types of cases. It is important to find a company that will be able to recognize the merits of your case and, in turn, offer you more competitive terms than a lender that may provide pre-settlement funding primarily to other types of cases.
Given that you are going to be giving up a portion of any settlement you receive in exchange for a settlement advance, you have an interest in ensuring that you retain as much of your settlement as possible. This means obtaining pre-settlement funding on the most advantageous terms possible such as capped rates.
2) Not doing proper due diligence on a pre-settlement funding company
Lawsuit loans are not regulated at the federal level, so there are many unsavory players that operate in the marketplace.
However, by carefully doing your homework, you can weed out reputable pre-settlement funding companies from the bad apples of the bunch. Checking for public records with government organizations like the Federal Bureau of Investigation (FBI) is one way of ensuring that a lender has not been involved in financial crimes before.
If an owner of a company has a terrible track record with any government agency, then it likely is not the company you want to obtain your funding from.
3) Not providing the information that a lender company needs
You may think you may not qualify for a settlement advance, so you do not bother sharing all the information you have regarding your lawsuit. Or the reverse may be true; you may figure it is so easy to qualify for pre-settlement funding without all the information the lender requests regarding a lawsuit loan.
If your attorney does not share all the information the lender is asking for, you may be denied, or even if you are approved, it may be on less favorable terms.
Alternatively, ensure your attorney provides all of the information potential lenders are asking for, because there is a reason the lender is asking for the information. If your lawyer chooses not to provide the required information, you could be unknowingly torpedoing your ability to get funding on the most favorable terms possible—or even worse, you may not get the loan, period.
4) Not understanding the fees and costs
A lender may claim on its website that it only charges a one-time fixed fee and no interest on pre-settlement funding. However, when you eventually receive the paperwork that spells out the exact terms of the financing that the lender agrees to provide to you, you may find out that what you thought was going to be the repayment terms are far different than what the lender’s website advertised. This is one reason it is imperative that you carefully review the paperwork associated with pre-settlement funding.
Before you sign the rights to a portion of your lawsuit away, understanding exactly what you will be charged and when is imperative. Deceptive advertising regarding rates and fees is one method that many unscrupulous pre-settlement funding companies use to convince borrowers to sign up on unfavorable terms. Ensuring you understand what you are signing up for is one of the most important parts of obtaining this type of funding.
Not all lenders are created equally, so caution and care are important
Pre-settlement funding is an excellent source of funds if you are a plaintiff who needs money to help sustain you and your family while you await the settlement or resolution of your case. However, there are many types of lenders out there, some reputable and some not so reputable.
Given that pre-settlement funding is not regulated at the federal level, some bad apples are operating in the industry.
Getting cash while waiting for your settlement, whether it’s your first or your third, is seldom accomplished without a few stressful days when you fund your case with an illegitimate company. But you can make things easier if you do your homework and work with a legitimate pre-settlement funding company.
Bottom line: Making sure you select a reputable lawsuit loan company and clearly understanding the terms you agree to provide the lender with interest in your lawsuit is essential. If you do your research on the front end before signing away the rights to a portion of your suit, consider this seriously, you will decrease the chances of not being left with nothing when your case eventually resolves.
With a Baker Street Funding lawsuit loan, for example, you get a capped rate, capped in the third year of your loan, with no hidden fees—and with non-compounding rates.
If you’re thinking about getting a lawsuit loan, consider what Baker Street Funding could do for you.