Lawsuits can be expensive. Depending on how serious the case is, they could drag on for years. Some costs you can expect include hiring attorneys, filing fees, service fees, and discovery costs.
Without a doubt, it can take a huge toll on personal or business finances. It can be tough to keep up with bill payments and other expenses during this time. Even those with savings quickly deplete available funds. And, you can only borrow from family and friends for a limited period of time.
Lawsuit funding can provide a quick effective solution. The funding companies avail upfront cash advances as you wait for the settlement of the case.
And, the great news is the best lawsuit companies will base payment on the outcome of the case. If you win, they bill, if not, they don’t.
Do note though, you need to be aware that this is not always the case. You also want to pay attention to the interest rates, billing structures, approval processes, and so on.
Our article looks at things to note when choosing lawsuit funding. It provides pertinent information to have if thinking of applying for the loans.
1. Do Some Research First
Before deciding on the lawsuit funding, do a little research. Learn everything you can about the pre-settlement cash advances.
Articles such as this one are an excellent starting point. But widen your scope to both online and offline resources. Take time to learn the pros and cons to help you decide if it is the best option.
Get additional advice from your attorney. They most likely have dealt with several legal funding companies before. They could refer you to some, depending on past relationships.
Another good source of information is legal funding reviews. See what other clients have to say. Such provide honest feedback on what to expect. Finally, ask for references and call them up.
If there is any whiff of impropriety, continue to search for the right company. You could save yourself a lot of headaches by taking time to do this.
2. Understand the Billing Structure
Your first concern would most likely be how much you can get in lawsuit funding. Different lawsuit lending companies have different limits. It could range anywhere from $500 to hundreds of thousands.
Ask the lending company to walk you through the billing structure. Reputable companies will have no problem with transparency. The less reputable ones will hide some fees, and only unveil them during the repayment.
- Application fees or any other costs right from the beginning. The best companies are those that will not charge to take on the case.
- Compare different interest rates, and how they calculate them. Compound interest will make the loan expensive in the long run. The costs will rise significantly every single month.
Come up with a figure and let the company compute what it would cost within a specific period. You can also do the same using online loan calculators. It helps to have clarity on how much you can expect to pay back.
3. Application Process and Approval Times
When applying for lawsuit funding, you want a hassle-free and quick approval process. The best legal funding companies can deliver cash in less than 24 hours. The approval process should not require the filling out of lengthy paperwork. In some instances, a phone call is sufficient.
The lending company will get in touch with your lawyers to get information on the case. It would be a good idea to alert the legal team that you intend to take the loan.
The willingness to talk to your lawyer is a sign of a trustworthy lawsuit funding company. Be wary about those who seem to be in a rush to give you a loan without the proper information.
Shop around and see what the legal funding companies require before qualifying you for the loan. Some will run a credit check, while others won’t. The latter is a better option if you have a poor credit score.
Do note, you can qualify for lawsuit funding even without a job. And, it gets better. You will not need collateral or even proof of income. Remember, they get their money if you win the case. Don’t struggle with bills and other expenses when you have a ready solution.
4. Read the Fine Print
As we stated, legal funding companies will advance cash and wait until settlement to collect. It can be a source of relief by not having to start payments mid-trial.
But, do take the time to understand what you are signing up for. The longer the case drags on, the more interest you will pay.
Also, confirm payment terms. It should be contingent upon the settlement you receive after winning the case. Check that there is no caveat requiring you to pay out of this outcome.
Less reputable companies can slip in a clause that makes you liable for some costs, even if you lose. Some statistics on personal injury cases are a bit sobering.
Up to 90% of cases that make it to trial do not win. You don’t want to be holding a bill that you cannot afford to pay if the case does not go your way.
It is a good idea to let a lawyer walk you through the legal jargon before signing on the dotted line. Remember, by law, once you append your signature on the documents, it is binding. You cannot later say you did not understand the contract.
Lawsuit funding has so many benefits. You get access to cash advances to help tide you over the litigation period. The lenders will give you cash even without a job or a good credit score.
Reputable companies charge a flat rate and will be upfront about any other expenses. You want to spend time searching for the right company. There is a lot of information available that you can use as reference material.
One of the best is customer reviews. They provide honest feedback that can help you make the right decision.
Do ask the lenders to walk you through the billing process. Read the fine print, and if there is something you don’t understand, seek advice from the legal experts.