Having been on the verge of foreclosure and possibly even eviction for some time. With no other financial routes to choose from, you decide to take the plunge and apply for a pre settlement loan.
Now that you’ve made this decision, the work is over; all you have to do is sit back, apply to several lawsuit loan companies and receive a cash advance. Unfortunately, not quite.
There is more to a pre settlement loan than just applying for one. This is but one assumption plaintiffs can make about lawsuit loans. Read on to learn several more assumptions about loans and trials, and why knowing these could prevent you from signing a one-sided loan that gets you into even more financial turmoil.
#1. My trial should be coming up so I don’t need to look at my financial options
One assumption plaintiffs can make is assuming that after they have filed a suit, it will only be a matter of weeks if not days for their case to be called and receive that notification about their trial date.
Unfortunately, plaintiffs can wait as long as 3 years to see the inside of a courtroom. The truth is, there are several cases in front of yours, not to mention paperwork that needs to be filed.
While you are waiting for your day in court to arrive, your medical bills are piling up and your mortgage goes unpaid for the second consecutive month.
Here’s What You Can Do
Instead of crossing your fingers hoping that trial will be around the corner, start looking at financial solutions as soon as possible.
Perhaps talk with friends and family about loaning money from them? Speak with a financial advisor? Or maybe apply for a traditional loan or open up another line of credit with a banking institution?
If these financial opportunities do not pan out, consider applying for a pre settlement lawsuit loan, which will provide you short-term relief so you can get back up on your feet before you receive that eviction notice.
Remember, there is a process when it comes to borrowing money—even if you are awarded a loan quickly. This means you have to start problem-solving early, knowing your options before your savings dry up and you find yourself in a financial mess you aren’t sure how to get out of.
#2. I don’t need to borrow that much money
There are a number of different factors that can determine how much money you will need to borrow such as number of months (or years) before the trial date, credit score, how much income is trickling in, if you can work (if you can’t, when and if you can come back to work), and cost of utility and medical bills, among others.
At the end of the day, assuming that you do not need to speak with a financial advisor borrow could result in borrowing too much money, which could put you in serious financial turmoil.
Here’s What You Can Do
First and foremost, speak with your financial advisor about your financial options. With the help from your financial advisor, do the calculations and come up with a dollar amount you may need to borrow if that trial date extends or a financial opportunity falls through the cracks.
Also, keep track of monthly expenses, everything from utilities, gas, and mortgage to your entertainment and cable. You need to know what you are currently paying for and if you need to make some financial changes before you look to a loan.
On a budgeting note, while we’d like to say our spending habits would automatically change during tougher financial times, that is not always the case.
Add in personal extras you normally purchase during the month to your expense list and budget. If worse comes to worst, you can take these out and have some wiggle room before beginning the loan application process.
(However, should you decide to apply for a loan, know that if you do get one, try to use it only on what you need and cannot live without.)
#3. I need to borrow a lot of money
On the other end of the spectrum, plaintiffs may assume that they need to borrow several hundreds of thousands of dollars while their lawsuit is pending.
Not talking with a financial advisor beforehand could lead to the plaintiff applying for multiple lines of credit, refinancing their home and pulling from their retirement plan even though they don’t have to.
Here’s What You Can Do
Again, speak with your financial advisor about what financial options are at your fingertips and how much money for a loan you’d really need. Tally up expenses, take an inventory of your assets, and, with a financial advisor, go over steps you can take to minimize the loan amount—and possibly even bypass it—if you do start to get in financial hot water.
#4. Paying back the loan means only paying back the principal
When you see advertisements on TV or on a billboard about lawsuit loans, you’re hearing and seeing phrases like “fast cash” without knowing the strings that are attached.
This may make it seem like that lawsuit loan company is going to give you a cash advance without interest. However, this is not the case. Pre settlement funding companies need to make money, which means they won’t generate income if you only pay back the principal.
Because of this assumption, you may have not financially prepared to pay off the loan and interest once you were awarded a settlement.
Because of this, you may actually end up being in more financial troubles than you were before applying.
Here’s What You Can Do
If you decide to apply for a lawsuit loan, discuss with the lawsuit loan company their interest rates, type of interest, and how frequently they charge it.
(Of course, make sure an attorney is present with you during this discussion as well as any other future interactions between you and the lawsuit loan company.)
Should your application be accepted and you are given a specific dollar amount, discuss with a financial advisor about how you will pay for the loan before accepting it and signing the contract.
Having a plan in place ensures that you will be able to pay off the loan (and interest), and help keep you out of the perils of debt.
#5. You are going to be awarded a settlement
Lawsuit loan companies put their money on the line when they give a plaintiff a loan. Which means they want to keep the odds in their favor and only accept applicants that are a near 100% shoe-in.
Nonetheless, this strategy does not always pan out. Cases that were considered a win can (and do) go the other way. Settlement that are awarded can end up being much lower than expected.
In the case that you are required to pay back the loan (and interest) even if you lose or are awarded a much smaller settlement than anticipated, you need to have a Plan B should things financially not go your way.
Here’s What You Can Do
Discuss with your attorney ways in which the case can go and prepare for all outcomes no matter how likely or unlikely they are.
Also, like we have said before, speak with your financial advisor and create a Plan B so if you are not awarded the settlement amount you had hoped for, or even no settlement at all, you will still be on your feet.
Final Thoughts: Ask Questions and Plan Instead of Assuming
Never, never, never assume when it comes to pre settlement funding. Always have a financial backup plan should your case take an unexpected turn or a financial option falls through the cracks.
That way, you aren’t stressed trying sliding into a financial debt that could take months if not years to get out of.
We have said this before and we will say this again: speak with your attorney and financial advisor before accepting a loan. Having (and using) their professional advice will save you from wasting time, money, and sleep over finances before and after the trial date.
What are your thoughts? Did you have a financial plan in place before accepting a lawsuit loan? Let us know by commenting below.
Summary
- It can take years before seeing the inside of a court room
- Don’t assume that your trial will happen in days or weeks after filing the suit
- Assuming you need to borrow a lot of money (or not that much) could lead to serious financial backlash
- Believing you just have to pay back the principal or thinking your case will win may put you in a place where you are not financially prepared and able to pay back the principal and interest once it is due
- Speak with your attorney and financial advisor so you can prepare for all possibilities and come out on top financially
For more information, be sure to contact Legal-Bay!
