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Lawsuit Cash Advance Myths (part 1)
As an homage to one of my favorite television shows growing up the theme of this this video will be MythBusters. We will discuss and hopefully I will debunk the ten most frequently heard myths about lawsuit funding.
Myth # 1 – Lawsuit Funding is for Impatient People
Story goes like this. John gets into a car accident through no fault of his own. A couple months down the line John thinks it is a certainty that he will be receiving a settlement and does not want to wait for his settlement so he decides on lawsuit funding.
OK first of all, no attorney/lawsuit funding company would recommend this. Any good attorney will utilize litigation financing for those customers it is deemed a necessity. Secondly, a lawsuit funding company will only commit to purchasing a small portion of your anticipated settlement proceeds, usually 5 to 10% so being impatient makes no sense for such a small portion of your proceeds.
Myth # 2 – Takes Advantage of Cash-strapped Clients
Yes, it is often true that those seeking litigation financing are often those who do not have other similar alternatives. But just because it may be a last resort to some people does not mean it cannot be a valuable tool for both clients and attorneys. Without lawsuit funding personal injury plaintiffs may be unable to pay medical bills and standard living expenses. And without lawsuit funding personal injury attorneys may be unable to properly litigate the case because of time and money constraints.
Myth # 3 – Funder will take most of the Settlement
If you choose a reputable company, most of the settlement money should go back to the plaintiff, not medical bills, not the attorney and certainly not a lawsuit settlement funding company. There should be no surprise fees associated with your lawsuit funding as both plaintiffs and attorneys are responsible for signing a contract.
If a lawsuit funding company is pushing the highest funding amount on to you there is a good chance you are not dealing with a reputable company. As there are costs associated with lawsuit funding plaintiffs should only request the funds they need not the funds they want. Additionally, plaintiffs should look into a series of advances instead of just one to save money.
Myth # 4 – Lawsuit funding advances are Payday Loans
I am only speaking for myself but I would be somewhat offended if someone were to compare payday loans with a lawsuit cash advance. First of all a payday loan is a loan so it has to be paid back, and usually at a 400% to 500%. A lawsuit cash advance is non-recourse so it you don’t receive a settlement you don’t owe anything.
Myth # 5 – Lawsuit Financing is difficult to get Approved
In terms of simplicity of approval process, a lawsuit cash advance is among the easiest to qualify for. With a traditional bank loan you may need to verify employment and have decent credit. With a cash advance there are no credit checks and no employment verification. Your lawsuit is the determining factor of your eligibility.