Examine the cost of claim financing

In the last article, we examined historical pricing patterns in the trial cash advance financing industry. We also discuss the business dynamics that often change prices in any business that puts capital at risk for profit. Specifically, we mentioned how the settlement loan industry evolved from a company that charges as much as 10% per month as “interest” on lawsuit cash advances to a company where applicants are routinely “financed” for as little as 15%. % per six-month period.

In this post, we examine the costs associated with claim financing and look at them from the perspective of an applicant who is in dire need of cash for whatever reason. From this angle, we can more accurately assess the costs associated with this type of financial relief, only available to those who have a pending lawsuit.

Since everyone’s circumstances are different, weighing the costs of obtaining a lawsuit loan or pre-settlement funds against the future earnings of an individual’s pending case can only be accomplished on a case-by-case basis. For this reason, perhaps the best way to illustrate this point is to use a hypothetical example.

Lawsuit Financing Costs – Hypothetical Example

A 36-year-old plaintiff in a lawsuit is unable to work and support himself and his family due to injuries sustained due to someone else’s negligent driving. Since 2008, the plaintiff has exhausted all other avenues of financial aid. You have borrowed money from your friends and family. You have taken out a home equity loan against the equity in your home. You have gone through your disability payments from work and the other “benefits” you receive do not cover your monthly expenses. You are currently 5 months behind on your mortgage and property tax payments.

Forced with an impending foreclosure proceeding, this plaintiff’s options are limited. For one thing, you can file for bankruptcy, which could save your home but ruin your credit rating for many years. You can hire an attorney for this, but the attorney requires upfront payment for their time and expertise.

Another option is to get lawsuit financing to help with your cash flow problems. Let’s briefly dig a little deeper into the analysis.

Cost comparison

We already discussed the costs associated with lawsuit cash advances. But what about the cost of not being able to pay bills on time, or at all? We may not be able to quantify costs exactly, but we can at least identify some potential problems. For example, defaulting on a mortgage could result in the following “costs” for the homeowner.

1. Moving the Home. The defaulting party must then find refuge. Typically, a rental unit requires the first and last month’s rent plus a security deposit. That’s three months’ rent in advance from the new tenant. Of course, if the person has three months’ rent, they could probably at least delay the foreclosure process. Therefore, there is a liquidity problem in addition to the existing problem. One can easily anticipate multiple “costs” associated with moving a place of residence (eg, moving costs, additional fuel expenses, storage fees, etc.).

2. Credit scores destroyed. Like it or not, this country operates on debt. Who is in debt to who is the oldest and possibly the most profitable game in history. Access to credit is an integral part of the game and is a function of credit scores. Obviously, a foreclosure would seriously hamper a person’s access to credit for car loans, future home purchases, appliances, or even credit cards. Also, even if credit is offered, the interest rates charged will be much higher than would be required otherwise. The above are simply two “costs” faced by the person in our example.

conclusion

When thinking about the above, it is helpful to weigh the long-term effects of these events. The real problem is how to accurately assess the cost and compare it to obtaining cash advance financing for a lawsuit against a case. Ultimately, the analysis depends on individual circumstances. Fortunately, the lawsuit financing business exists for those who do the research and choose lawsuit loans as a possible solution. Thousands of people make this decision every day. Thank you for your interest in the pre-settlement loan business.