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Settlement Loans And Lawsuit Loans: Types, Pros, Cons, And Potential Pitfalls

By Dr. Tom Rhudy

Traditionally, the terms “settlement loans” and “lawsuit loans” referred to a court settlement from a law suit. These settlements were to be paid out to you over a period time, in specified amounts and due dates, and were considered incoming revenue, although not necessarily taxable. Because they were money owed to you, you could borrow on, or even sell your interest in it.

You had to be employed to borrow against a lawsuit loan, but most court settlements were a result of some injury and this was often not a viable option for injured people. However, the other option was to basically sell the settlement to some investor who gave you less than the total amount, but you at least got your lump sum of money. Litigation funding turned the tables on heavy-handed creditors!

Although this may not be preferable, but the fact is that many of those against whom judgments are ordered would be classified as “judgment-proof.” If you need the money for major health problems, you may have to liquidate assets to pay doctors’ and hospitals’ bills. Lawsuit Loans and settlement loans often keep plaintiffs from having to liquidate their assets merely to satisfy outstanding indebtedness.

The more common use of settlement funding today is a lawsuit loan that one may obtain for those people who otherwise would have much more than they make and would get behind on their monthly payments. A settlement loan is one way to avoid financial distress in litigation.

If you decide to restructure, have your IRS Tax Return papers handy. Lenders will want to have proof of your ability to make payments. Sometimes your creditor will agree to waive the accrued interest while the account was late, and extend the term of the loan so you have smaller payments. (Once again, there is no credit-check required for those seeking lawsuit loans and settlement loans.)

Most often these creditors will not agree to any extension or restructuring, they want to settle it and get it off their books by agreeing to a smaller total amount of money to pay off the high balance you ran up. The down side of this is that if you do not have the money to make your smaller monthly payments, where are you going to get a large sum of money to pay this completely off?

Whether getting obtaining lawsuit loans and settlement loans or attempting to work out other agreements with your creditors, the main issue is that you should plan your personal finances much better to offset any unforeseen events. Avoid using your credit cards to charge things. Put the same amount in a bank account where it can build up and then divert some of it to a retirement account where it will help offset the ever rising cost of living when the time comes for you to retire.

Looking for more information about lawsuit loans? Please allow us to provide more information regarding lawsuit settlement loans. Please stop by today, and you may either apply online for a lawsuit settlement loan or review our settlement loans frequently asked questions archive.

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Article Citation
MLA Style Citation:
Rhudy, Dr. T. "Settlement Loans And Lawsuit Loans: Types, Pros, Cons, And Potential Pitfalls." Settlement Loans And Lawsuit Loans: Types, Pros, Cons, And Potential Pitfalls. 24 Jul. 2010. uberarticles.com. 31 Oct 2014 <http://uberarticles.com/finance/loans/settlement-loans-and-lawsuit-loans-types-pros-cons-and-potential-pitfalls/>.

APA Style Citation:
Rhudy, D (2010, July 24). Settlement Loans And Lawsuit Loans: Types, Pros, Cons, And Potential Pitfalls. Retrieved October 31, 2014, from http://uberarticles.com/finance/loans/settlement-loans-and-lawsuit-loans-types-pros-cons-and-potential-pitfalls/

Chicago Style Citation:
Rhudy, Dr. T. "Settlement Loans And Lawsuit Loans: Types, Pros, Cons, And Potential Pitfalls" uberarticles.com. http://uberarticles.com/finance/loans/settlement-loans-and-lawsuit-loans-types-pros-cons-and-potential-pitfalls/


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