Future Settlement Funding
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Future settlement funding can be a possible answer for someone waiting on a seemingly certain legal financial judgment but may be on hold for a year or more on final payment. Companies can be found on the Internet that will advance lawsuit funding and allow qualifying parties to get much needed funds ahead of the formal lawsuit judgment. In many cases, the payout can happen in just a few days and some companies offer a non-recourse risk alleviation policy. This policy enables the recipient to know that if something happens and judgment goes against the him, the money will not have to be repaid. Making this advance work for the lender are interest rates and advance commissions that will provide a handsome return on the advance offer.
Future settlement funding seemed to be the answer for the young woman who had been in a horrible car accident and was permanently disabled as a result. Her medical bills were causing the woman and her family to drown in an ocean of debt and the husband couldn't keep up with the household expenses plus the added medical bills. The other driver had been at fault, and the attorney expressed complete confidence that the family would receive a very high dollar judgment, but the defendant's insurance company kept stalling and a payout could be over a year away. The woman looked to a provider of settlement funding to help with the onslaught of unpaid bills. But there were a number of issues to consider. A person should soberly consider these words whenever making a decision. "Every way of a man is right in his own eyes: but the Lord pondereth the hearts." (Proverbs 20:2)
Ethical funders do not want a client to take any more money than she needs. The cost for such pay ahead kind of funding is very expensive. Part of the expense is paying for three or four day turnaround as opposed to the weeks needed for a loan to wrap up paperwork. So the woman had to decide how much money her family needed and not necessarily what they wanted. The family's credit history or present state would not be a question with a future settlement funding lender unless the family was in bankruptcy, and unlike a bank loan, there would be no upfront fees, no microscopic look by a financial institution and no monthly payments. Fees and interest for the future settlement funding would be taken out at the end when the final settlement was made.
Typically, a fund provider will have a group of attorneys look over the case to make sure there is a very high probability of judgment and payment. Not every future lawsuit settlement will qualify. But in many cases, a plethora of case types are considered for funding. Certain workman's comp cases, sexual harassment cases, a few types of divorce cases, and a number of other case types can be eligible for consideration. But the actual circumstances of the cases will be the deciding factor in whether or not the request will be considered. And almost no provider of future settlement funding will consider a case where the plaintiff is suing an individual.
The injured woman and husband absolutely needed ten thousand dollars for their immediate needs. The attorney has asked for ten million dollars, and was expecting to get about six, and would be taking about 43% of that for his assistance in the case. The ten thousand dollar future settlement funding seemed paltry but the pay back of that amount could quickly add up. Providers of these funding loans charge as much as twenty five hundred dollars for every ten thousand dollars loaned, plus an interest rate of 2-15% per month, depending on the company providing the money. Since there was the real possibility of the lawsuit continuing to drag out over eighteen months, the ten thousand pay back could very easily reach thirty thousand in total costs if nothing was paid on the debt during those months.
Very often, the real providers of these funds are not the company to which application or requests are made. Typically future settlement funding investors are never seen, and may consist of angel investors or hard money lenders. Angel investors, according to the Small Business Administration are usually upper middle class individuals who want to make a nice profit on their investment but also want their money to be used in a helpful, personal way. Hard money lenders are usually involved only in business types of "bridge loan" transactions but in tougher economic times may look for alternative means of investing and future settlement funding may be a possibility. These investors are the ones that usually dictate the high upfront costs and the high interest rates for future settlement transactions.
Not all funding agents get the money to a client in a few days. That should be a question asked in an initial interview with an agent. This industry is filled with scammers and businesses that have no idea how to really take care of its customers, so proceed with caution. Check with the Better Business Bureau and ask for a list of clients that have used the company's services. And there may be one more fly in the ointment that ought to be checked out before making such a move. It is a very distinct possibility that your attorney may not approve of getting a future settlement loan. Inform him or her of this inclination and see what the response will be. A person does not need an attorney of record angry with him.
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