1. What Is the REAL Cost of a Lawsuit Cash Advance versus a Bank Loan?
2. When Lawsuit Funding Makes Sense
3. Lawsuit Loans Are Not Really Loans
4. Use a Lawsuit Cash Advance to Repair Your Credit!

What Is the REAL Cost of a Lawsuit Cash Advance versus a Bank Loan?
In terms of just the cost of the use of the money, a lawsuit cash advance will always be more expensive than a bank loan. However, that is just one dynamic of the issue. Even a clock that is broken shows the right time twice a day! The hidden  “cost” of a bank loan is the “cost” of defaulting on it.

Joe was injured, could not work, and was forced to file a lawsuit to collect damages from the party that caused his injuries. Although Joe was not working, he had pretty good credit, so he got a bank loan to cover living expenses. That was fine for four months until Joe ran out of money. He managed to stay in his apartment, but his car was repossessed and he defaulted on the loan. He did finally receive a settlement, but he now has no car, his credit is ruined, and it will take him years to rebuild his credit to the point that he can qualify for a car loan.

Jane was injured, could not work, and was forced to file a lawsuit to collect damages from the party that caused her injuries. Instead of a bank loan, Jane opted for a lawsuit cash advance. The money covered her expenses for four months, then she applied for and received a second advance. While dollars were tight, Jane managed to stay current on her credit cards and auto loan. When her case settled, Jane got less from her settlement than Joe got from his settlement because Jane’s lawsuit cash advance, plus the risk premium on that advance, was paid back out of her settlement. However, Jane still has her car and good credit.

When Lawsuit Funding Makes Sense
Any lawsuit funding company will agree that lawsuit funding is not appropriate for every plaintiff involved in a lawsuit. For the plaintiff in need of funding, there are other sources of cash that should be considered first.

• Savings: While few people save today, those that do should first draw upon any money they have in a savings account or at their credit union.
• Life Insurance: Whole life insurance policies build cash value, and you can borrow against that cash value. And doing so does not reduce the level of insurance coverage.
• 401-K or IRA: While these are intended for retirement, borrowing against them is better than eviction or bankruptcy. Money can be taken from a retirement account and there is no penalty if it is repaid with six months. If it is not repaid, you will have to pay taxes on what you withdrew, but this is also better than filing for bankruptcy and losing your home and car.

Conventional borrowing has a significant downside over lawsuit funding: Monthly payments! Whether you get a cash advance on a credit card, use a personal or home equity line of credit, or get a conventional loan, you have to start making payments immediately! That means that in addition to all of your current monthly obligations, you now have yet another new monthly bill, your monthly payment on the loan or line of credit!

Lawsuit Loans Are Really Not Loans!
While lawsuit cash advances and other types of lawsuit funding are often referred to as “lawsuit loans” they are really not loans at all. Here are the fundamental differences.

• Easier to Qualify: To receive a conventional loan, you must have good credit and be able to verify your employment. Neither is necessary to qualify for lawsuit funding!
• No Monthly Payments: Any type of conventional loan will require that you make monthly payments on the principal and interest. With a lawsuit cash advance, the risk premium accumulates and the advance is paid off in a single payment from the proceeds of your settlement.
• Non-Recourse: A bank loan must be repaid regardless of the outcome of your lawsuit. A lawsuit cash advance is only repaid if you win your case or reach an out-of-court settlement.

In fact, for the lawsuit plaintiff who receives a lawsuit cash advance and loses his case, the lawsuit cash advance is the only money that plaintiff receives from his lawsuit!

Use a Lawsuit Cash Advance to Repair Your Credit!
A unique dynamic of lawsuit funding is that a lawsuit cash advance does not show up on your credit report. Just as you would not report the expected proceeds of a pending lawsuit as an asset, you do not report a lawsuit cash advance as a debt. That presents a unique opportunity for plaintiffs in lawsuits who also have credit problems!

The Catch-22 that people with credit problems face is that they cannot get credit when they need credit most. Since a lawsuit cash advance is NOT based on your credit rating or your income, you can qualify for lawsuit funding even though you would not qualify for a bank loan or line of credit.

Use the proceeds of your lawsuit cash advance to first catch up on any past-due accounts. Do not pay off any loans or credit cards, pay just enough to get current with every creditor, then stretch out the balance to make minimum payments so you stay current until your lawsuit settles.

When you win your lawsuit or reach an out-of-court settlement, your lawsuit cash advance is paid back from the proceeds of the settlement. You can then use the balance of your settlement to pay off all or a portion of your bills. The result is that your lawsuit cash advance enabled you to improve your creditworthiness and reduce your total indebtedness!

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