Case loans are not actually loans. They are pre settlement funding made by a client who is not able or refuses to wait for a lawsuit’s final settlement. Strictly speaking, case loans are actually agreed upon advances, which is used as a counter to expected future payouts from a lawsuit. Rather than a loan, case loans are more of an investment for those subsequent payouts. They can also be considered as a working capital.
Most lenders rarely finance offenders who are cash-strapped. Generally, the lawyers and law firms enjoy the lenders’ formal loans or lines of credit. Unfortunately, this policy leaves the lawyers’ clients out of the picture.
Advantage of “Case Loans”
There are several forms of non-recourse lawsuits funding that are considered to be in the same page as of a case loan. This funding can greatly assist the people who are in need of the cash that would sustain the lifestyle they want while waiting for their lawsuit conclusion.
Case loans are most advantageous due to the reason that they do not pose any serious financial risk for the client. The client is not legally obliged to pay back any case loan amounts that are more than the amount received from the case in the event that the client’s lawsuit backfires or if it settles in a much lesser value.
In simpler terms, a client’s obliged maximum repayment to the lawsuit funding company is just their portion of any recovery or less, which may be dependent on the contract terms of the case loan.
The Right Time to get a “Case Loan”
In cases when “case loans” are aggressively priced with ordinary loads, they will be a sensible funding alternative for a number of clients who are waiting for the concluding statement of their lawsuits. But then again, they are usually priced in a higher value. “Case loans”, in most cases, state a certain value that when the lawsuit fallout in sufficiently large amount or settlements, it would lead the client’s total repayment to be higher than that of the original advanced value. Although this case is normally structured to avoid any relevant money lending laws.
With all that said, it is not appropriate for every client to resort to “case loans” but rather should normally consider this financial aid as their last option.
First options for funding sources must include credit cards, unsecured lines of credit, home equity loans, personal loans, or cash advances from friends and family. Exhaust these resources before considering “case loans”. These funding sources, besides being less expensive than non-recourse “case loans,” are normally paid back independent on the product of the lawsuit. They are proven to be less expensive, especially in situations where a promising legal outcome permits a full repayment of the funding company’s maximum charges.
But when clients are financially challenged and could not pursue for other sources of funds, maybe for the reason of dealing with “must pay” medical bills or other expenses such as food, utilities, education and mortgage, a much sensible option would be a “case loan” compared to some other alternatives such as not paying at all.
.:About the author:.
James Sheridan is the Contracts Manager at Pegasus Legal Funding LLC and is responsible for the final stage of the funding approval process. James focus and priority is delivering to PLF’s clients the funds they need as quickly as possible