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Pre-Settlement Loans Case Study

Explaining the benefits of pre-settlement loans may be difficult because a lot of people already have pre-conceived notions about this type of financing. So let’s just go ahead and look at one example to help you understand that these loan options aren’t so bad after all.

Mr. A. Collins was injured by a drunk driver while he was driving on the freeway one night in January of 2012. He had no health insurance, unfortunately but he did have a life savings amounting to $26,380 tucked away in the bank. But a month of hospitalization and 8 months of rehab cost him over $43,000 which means he still had to borrow money just to pay for everything.

Mr. Collins couldn’t find work months after his rehab and so he was in danger of losing his home, which was what he put up as collateral to get the money he needed to pay for his medical bills. He sued the defendant and was offered an out of court settlement of $50,000. Obviously, the litigant felt that was a low blow offer. Although he felt a lot of pressure because he had no money to pay his bills, he decided he could get the compensation he deserved if he went on with his lawsuit. What he did instead was to apply for one of those pre-settlement loans and received $70,000. Five months later, the jury awarded him $150,000. He paid back the lender $70,000 plus interest (about $6,000).

So, even though he paid a significant amount of money in interest charges, he’s still glad he chose this option otherwise he wouldn’t have gotten the $150k settlement.

 

Pre-settlement loan: understanding the basics

The pre settlement loan period is the time after which a plaintiff has brought a claim, but it has not yet been executed or a judgement has not been issued. At this time, the legal claim is normally still pending. Legal researchers have found that claims normally remain at this stage for an average of about 297 days. The “pre-settlement loans” is actually a cash advance against the future claims settlement. It is a payment that helps the person in need during some of the most troubling financial times they could ever face. They can help take care of daily expenses like bills and mortgages and provide financial help during such times.

These loans are not the same as traditional debt financing, and do not require monthly payments. Further, one does not have to pay if they lose their claim in court. Given these terms, there is always the allure to borrow more money than one actually needs. This might end up being a poor decision. Here are some important tips that will help you borrow the right amount;

Interest rates and fees

Before committing oneself, ask clearly about the interest rates and the fees involved. The best pre-settlement loan provider always make the process transparent. Still, it pays to find out whether there are any hidden costs or mandatory insurance fees before formally signing the agreement.

Pre-Settlement Loan: Case details

Being able to provide all the relevant details of the case at the time of application saves everyone a lot of time. The loan company will likely find it more difficult to approve the loans without all the details provided anyway. They will demand information like hard evidence, police reports and medical reports before the actual approval. Collect all this information from your lawyer and have them handy.

The lawyer

Your lawyer remains a good resource even when looking for a settlement company. Ask them for recommendations or talk to him about the company you finally choose.

The “pre-settlement loan” period is perhaps the most difficult time after a case has been lodged. With a good lawyer and pre-settlement loan company, you will be in the right hands legally and financially.