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Legal Action Loan Providers Claim Pre-settlement Financing Isn’t A Loan

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Legal action loans are cash advances depending on the possible outcome of legal settlements. Investors are increasingly on the hunt for lucrative bets. This interest has caused lawsuit lending to skyrocket in recent years. Lawsuit loans are unregulated in most states and the practice is being called “legal loan-sharking” by consumer advocates. It would be more beneficial for people just to take out a cash advance. Article source – Lawsuit lenders prey on desperate personal injury plaintiffs by MoneyBlogNewz.
There weren’t loans made, legal action loan companies claim
In order to assume that litigants will win their cases, over $100 million a year is spent by legal action lenders. Those within the practice say that they are not loan companies which mean lending laws don’t typically apply to lawsuit loans. The transactions are really just investments if you ask any legal action lender. This is because if the case is lost then the client doesn’t have to pay the cash back. Because they’re not subject to limits on interest rates, lawsuit lenders charge APRs as high as 215 percent, claiming that lawsuit loans are riskier than other forms of lending.
Court action loans charged as fast money and easy money
Many argue with the claim that lawsuit loans are very risky. There are facts to argue it. Late night television will generally have ads for legal action loan providers present. Typically they say that quick money and easy money will come to them. They hand pick all of the cases that they want. Generally this is just personal injury cases and more. The New York Times spoke with a personal injury lawyer who explained that he was not allowed to talk about the cost of the loan, going as high as 99 percent of the lawsuit loan amount, when trying to screen applicants.
Many states needed to keep up with the lawsuit lenders right now
Lawsuit loan companies have escaped regulation by successfully lobbying state legislatures to exclude legal action loans from laws that regulate the credit and lending industries. On January 7 within the Illinois General Assembly, a law that didn’t include legal action lenders was blocked. The two largest lawsuit loan providers within the nation, Oasis and LawCash, were sued by Colorado in Dec.. Colorado attorney general John W. Suthers said that since borrowers are charged interest once they receive a settlement, lawsuit loans are indeed loans, and Oasis and LawCash are violating CO lending laws.
Information from
New York Times
nytimes.com/2011/01/17/business/17lawsuit.html?emc=eta1
PointOfLaw.com
pointoflaw.com/archives/2011/01/illinois-legisl-1.php
Law Week Online
lawweekonline.com/2011/01/colorado-ag-questions-legitimacy-of-pre-settlement-legal-financing-companies/

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