When it comes to lawsuit funding there are several options and within each option you may have choices. The most common type of legal financing is pre settlement. This option is available to individuals that are in the process of a claim or lawsuit. Whether the case has just begun or it's going through an appeal, if the case has not yet reached closure, the option will always be pre settlement funding. The second option is post settlement. This option is available to individuals that have already reached a settlement or verdict. If the individual is waiting for their award through a settlement or judgment, the option is considered post settlement funding.
The different payment options:
When a person applies for legal funding they may also qualify for different payment option. A person may have the option of receiving a cash advance in a lump sum or through monthly or quarterly disbursements. This is most commonly referred to as a line of credit. When a person is approved for a maximum amount he or she may elect to receive several disbursements up to the maximum, over a set period of time. The option will be available up to a certain time period, as lawsuits can change. In the agreement, a company may put stipulations in the contract stating the client has up to a certain date to access the line of credit. If the person goes over the date, the company will probably underwrite the case again.
There are several reasons why a person may decide to borrow on a payment schedule. A plaintiff may decide to receive a line of credit because it provides them with the comfort of knowing they have additional funds available if they need them. Another reason why a line of credit makes sense is because it allows a person to borrow only what they need. Because litigation financing can be expensive its best to borrow only what you need; compounded rates and scheduled increases can add up fast. If a person receives a large cash advance up front they may be more inclined to spend the money frivolously. A line of credit can help you budget the money for the most important items such as ongoing mortgage and rent payments, car payments and groceries.
The option of declining an offer without paying an application fee:
If a person receives an approval they should not be required to pay an application or underwriting fee if they decline any offer. A person's financial circumstance may change for the better during the process and no person should be required to agree to an approval for any reason.
It is important that each person take advantage of all the options available to them. Each person typically has a unique circumstance and they should have the ability to decide what makes sense for them.
Legal funding can be expensive and a person should only borrow what they need.
Josh Shores is a Director of LawLeaf, a legal funding company.
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