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Sunday, August 30, 2009

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Pre Settlement Lawsuit Funding: Loan Sharking or a Saving Grace for Indigent Plaintiffs? Pre settlement lawsuit funding is an advance against a pending personal injury lawsuit offered to plaintiffs who need money for necessities while waiting for their legal case to resolve. Because lawsuit funding is non-recourse, which means that the risk of the transaction falls entirely on the funding company and plaintiffs pay only if they win, lawsuit advances are not considered loans and are not governed by usury laws. Consequently, funding companies are unregulated and often charge high fees compounded monthly, where the accumulated interest is added to the principle every month and the plaintiff ends up paying interest on interest. This proves to be a very expensive proposition and, even with low interest rates, highly exceeds the cost of a regular bank loan. The caveat is that most injured plaintiffs are unable to work, have no income, and no other means of securing a bank loan. Burned by the recent mortgage crisis, banks and other traditional lending institutions are very discerning in extending loans and many plaintiffs simply do not qualify. Furthermore, even qualifying plaintiffs would have to pay monthly interest fees on the loan, which, without income, they cannot afford. In contrast, lawsuit advances are offered with no up-front or monthly fees, no credit check, and no employment verification. As attorneys are prohibited from lending money to their clients and not everyone has wealthy family or friends willing to extend an unsecured, low-interest personal loan, for many personal injury plaintiffs a lawsuit advance is the only means of support. Faced with mounting debt, bankruptcy or eviction, they welcome the only opportunity they have to manage their finances during the pendency of their lawsuit. Creatively speaking, A Mastercard commercial for lawsuit funding would be something like this: average monthly interest on a lawsuit advance: 3.5%, average low income rent in NYC $1,250.00. Not being homeless: Priceless. Conclusion Due to its high cost, pre-settlement funding should be considered as a last resort, after all other funding options have been exhausted. Prior to contacting a funding company, plaintiffs should research the market for the lowest rates. For more information, including how to obtain a flat rate lawsuit advance without compounded interest, contact CashExpress Funding, LLC at 800-303-3193 or visit us on the web at www.getcashexpress.com for an easy online application.

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