Stephen Pauwels, BridgePoint Financial Services | November 23, 2011 | Posted in Commentary
The following are some key considerations for anyone exploring a litigation settlement loan:
Loans against future settlements should only be considered as a last resort once other less expensive alternatives have been exhausted (including family, friends and more traditional lenders such as banks if the required monthly payments can be maintained).
Your lawyer is the best source of information about the status of your claim and any financial benefits you may be entitled to. While ultimately the decision to borrow funds against a future settlement is yours to make, it is important for your lawyer to understand your financial situation and for you and your lawyer to discuss the pros and cons of your available options.
Settlement loans are not intended for discretionary purchases and should only be considered to pay for:
If the loan is to be used to cover ongoing living expenses, a "staged" loan where predetermined amounts are advanced to you each month may be a good option. Staged loans offer borrowers the peace of mind of a regular source of funds while reducing interest costs compared to lump sum loans (interest only accrues once funds are advanced). Depending on a borrower's needs, a combination lump sum/staged loan can be arranged.
Many borrowers (and their lawyers) mistakenly assume that the terms offered between different litigation lenders are similar. In fact, the total financing costs between the main litigation lenders in Canada can vary between 20% to over 50% per year. Unfortunately, many litigation lenders do not disclose their loan terms up front and several add an array of fees, charges and interest rate fluctuations over time which can be very confusing to borrowers wishing to know the true cost of the loans.
The following are suggested questions that borrowers can ask each litigation lender to make a proper "apples to apples" comparison:
Download this article (PDF).
Please contact us if you have any further questions regarding settlement loans.
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NATIONWIDE LENDING SERVICES available in Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland & Labrador, Northwest Territories, Nova Scotia, Nunavut, Ontario, Prince Edward Island, Yukon Territory. PLAINTIFF LENDING SERVICES are commonly referred to as Settlement Loans, Personal Injury Loans, Lawsuit Loans, Pre-settlement Loans, Litigation Loans, Litigation Lending, Personal Injury Funding, Personal Injury Advances, Law Firm Loans, Law Firm Financing, Law Firm Funding, Legal Funding, Legal Loans, Legal Financing, Litigation Funding, Litigation Financing, Settlement Advances, Settlement Financing. BridgePoint Financial Services provides innovative financing and risk management solutions for the Canadian market (Canada).