The Pros And Cons Of Pre Settlement Funding

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Pre settlement funding is a relatively new form of lawsuit financing that has recently come into full play in the wake of sweeping litigation advances. As previously stated, pre settlement funding does offer a lower risk to a lawsuit funding company than a bank loan due to there being no upfront commitment to provide funding. This means you do not need to repay the funds you receive if you lose your lawsuit. However, there are significant drawbacks associated with pre settlement funding. First and foremost, pre settlement funding typically involves extremely low interest rates, as well as exceedingly long repayment terms. While this can be of great benefit to some plaintiffs who have little chance of winning their cases, it also greatly reduces the value of any settlement award. Visit  to obtain more knowledge on pre settlement loan funding.

Typically, pre settlement funding is obtained through a cash advance loan, which is in turn funded through credit card or other personal credit lines. Once again, once you fail to make payments on the loan, your credit rating will suffer, which will further complicate matters. It is imperative that individuals who obtain cash advances should understand that they are expected to pay off their loans in full at any cost.

The second major disadvantage associated with pre settlement funding loans is that they typically carry very high interest rates. This makes it very difficult for persons who are trying to recoup some form of debt. Moreover, those who have poor credit ratings to find that they are often unable to obtain reasonable terms on these loans. One may be able to find a marginal interest rate, but there are few lending institutions that will provide financing when one's credit score is below optimal levels.

The third major disadvantage of a pre settlement funding loan is that there usually isn't an opportunity for borrowers to shop around for the best terms. When you get a loan from a standard financing institution, you will be offered terms based on your credit rating and income. In many instances, you can negotiate favorable rates or payment terms based upon various factors. However, if you apply for a pre settlement funding loan from an individual investor, you will not be afforded the opportunity to do so. If you are serious about seeking such funding, you should contact several investors to compare rates and terms and get pre-settlement lawsuit funding loans that are suitable for your situation. This article helps you discover more about pre-settlement  loan funding.

There are also disadvantages associated with pre-settlement loans. One significant disadvantage is that these loans are short term funding instruments. Since the proceeds of such loans are expected to be paid out to settle the underlying lawsuit fairly quickly, it is important to note that you may only have a few months or even a few weeks to receive your funds. If you need cash quickly, you may have to rely on your credit cards and liquidate assets to repay your lenders.

Another drawback associated with pre-settlement funding is that it is difficult to obtain. Most lending institutions are more interested in obtaining a secured debt. Secured debt is debt that you can secure with property or other assets. For example, if you file for divorce proceedings and have received a legal case stating that you are liable for alimony payments, you may not be able to obtain a loan until the case is resolved. This means that once your attorney receives your case and determines the outcome of the case, you could have to repay the pre-settlement funding advanced to you.Check out this post that has expounded on the topic: