Settlement Loans Roll in Legal Claims

Many consumers are initially confused regarding Pre Settlement Funding and how the approval process works. Settlement Loans are not actually loans and in the purest form they are simply a cash advance against a pending settlement. There is no personal obligation to repay the cash advance, and there is no creation of debt until the case actually settles.

Settlement Loans afford people the opportunity to access a potential future asset without the personal obligation to repay. This is significantly different from a “loan” because there is no personal obligation to repay and there is no creation of debt at the time that a cash advance is issued.

Settlement loans are issued based on the merits of the pending claim or lawsuit. They are issued as business risk transactions and not based on credit checks or income verifications. Loans are issued based on credit score and income verifications but a lawsuit cash advance is strictly a business transaction based on probabilities and risk of a future outcome.

With all of this in mind, it is very important that consumers understand the distinctions and only look to access this form of funding if it makes sense for them.

These transactions are available to claimants that have a pending legal claim and are waiting for their personal injury lawyer to settlement their legal claim. It is important to realize that these transactions can be “reflexive” in nature. Reflexivity is a term coined by George Soros and describes how the fundamentals of a company or transaction can be influenced by the stock price itself.

A settlement loan can increasingly had influence on the potential for an actually settlement based on the size of the cash advance and the final settlement amount. As the cash advance size increases, the potential obligation to repay increase with time and lowers the potential chance for a settlement.

In addition, settlement loans can increase the size of settlement if the funds are actually invested into the valuation improvement of the legal claim. If the funds are used for medical expenses related to the claim or they are used for investigative purposes that will help improve the liability of the legal claim. There are three basic uses for money that is received from personal injury funding.

Use of Monies from Lawsuit Cash Advances

  1. Funds are used to help increase the damages related to the legal claim. If funds are used to pay for medical care directly related to the legal claim that otherwise would not had been available, then economic damages will be increased.
  2. Funds are used to help prove the liability of the legal claim. If the funds received from settlement loans are used to investigate and/or prove that the defendant was negligent and responsible for the damages then these funds are ultimately increasing the value of the legal claim. It will also increase the chances of a successful settlement for the plaintiff
  3. Funds are used for personal living expenses. When cash advance funds ares used in this nature then they tend to increase reflexivity to the equation. Since the funds do not have a direct impact on the valuation of the legal claim, they will be more likely to affect the ultimate settlement.

Lawsuit Cash & Freedom for the People

The justice system in America has always been unequal based on the financial strength of the parties involved. When it comes to personal injury claims in the United States, plaintiffs have been able to hire attorneys on a contingent basis which does give access to poor consumers. However, large well capitalized defendants can use their financial strength to offer low settlement offers and delay settlements based on the situation of personal injury victims.

Many of these people are injured and unable to work. Their income has been cutoff and at the same time they are being offered low settlement offers form large insurance companies. This financial inequality has been lessened by access to cash advances, otherwise known as settlement loans.

A cash advance can be a win win situation for a plaintiff if the money received allows the plaintiff to wait for higher settlement offer that ultimately covers the cost of the lawsuit loan and creates more money, even after the settlement loans have been repaid.

It is important to seek all potential alternatives that are available so that plaintiffs do not have to accept low insurance settlement offers. This may entail borrowing money from relatives, borrowing funds from a retirement plain or allowing a spouse to cover the bills until a fair settlement offer is available. If these options are not available then a lawsuit cash advance may be an excellent option.

Finally, shop around for companies that have been in business for 10+ years and offer lower, capped fees. Then you will know the maximum amount owed if your lawsuit takes many more months or years than anticipated.

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