If you’ve been in an accident, are out of work, and are short on cash, filing a lawsuit can be challenging. But your attorney is pushing the prospects of a valuable settlement. At this point, you may have been encouraged to pursue settlement loans. However, they seem too good to be true. There are lots of myths about settlement loans, so it helps to know the absolute truth.
These common myths include:
Settlement Funding Is a Traditional Loan
Loans provide quick access to money but come with stiff payment terms and high interest rates. While a loan requires monthly payments, settlement funding does not. It won’t add to your debt because the cash is paid back only if your case wins. A loss means you’re not obligated to pay back anything, unlike with a traditional settlement loan.
Settlement Funding Is Against the Law
There is nothing illegal about a settlement advance. The funding company offers an amount based on the merit and value of your case. They are not taking sides; nor does the lender have any say in how your case is handled. The American Legal Finance Association (ALFA) forbids any funding company from interfering with a case.
Pre-Settlement Funding Is Not Regulated
There has been an increasing amount of regulation in the lawsuit funding industry. Various laws protect the plaintiff’s best interests. States can establish regulations while the ALFA encourages best practices including disclosure agreements, written reviews by the client’s lawyer, and a five-day cancellation period. Federal rules establish how funding companies disclose terms, while states generally regulate interest rate limits.
Poor Credit Will Prevent Approval for Funding
Legal funding companies typically don’t check your credit. The funds are backed by the future proceeds of a settlement. Meanwhile, approval is based on the facts of your case. Funding can be received within 24 hours. It’s generally easy to apply; you just need to ensure your lawyer is open to having the lender review your case.
Lawsuit Funding Is Only for Personal Injury Cases
While many funding companies focus on auto accident, slip and fall, medical malpractice, or premises liability cases, a case doesn’t necessarily have to involve an injury or liability. You can have a case involving discrimination, sexual harassment, or wrongful termination and receive funding. Legal funding companies may consider any case involving a high amount of damages and a defendant who is insured.
Legal Funding Has a High Cost Overhead
Not only are settlement advances easy to obtain. They are generally affordable and don’t involve application fees, hidden costs, or out-of-pocket expenses. While interest rates reflect the risk the funding company takes on, you won’t be required to pay more than your settlement is worth. Your lawyer will handle the transaction and deliver your settlement check after all payments have been made
You Are Obligated to Accept an Offer
If you apply for settlement funding and receive an offer, you can discuss the terms of the contract with your attorney. Depending on the circumstances, you can reject the offer or take a lesser amount. You could even make a counteroffer, especially if you haven’t yet signed a written contract.
Settlement Loans Cover the Full Value of Your Case
The funds cover just part of a potential settlement, leaving room for negotiations but with enough money upfront to cover living and medical expenses. Your attorney nor the settlement funding company wants a trial, which increases the risk of losing. Therefore, the goal is to help reach a settlement and not prolong the case. The odds of approval are higher if the attorney thinks the chances of winning are solid.
Apply Now with Fund Capital America
We offer funding options in the form of non-recourse settlement loans. A cash advance on your future settlement can be used for medical bills, rent, and other expenses while you wait for your case to settle. Just submit our online application for a full case review and receive an offer within 24 hours. Apply for a lawsuit cash advance or call 855-870-2274 now for more information.