What happens if I miss a payment on my pre-settlement funding?
Missing a payment on pre-settlement funding can have serious consequences. Pre-settlement funding is a way for those who are involved in legal proceedings to receive immediate financial assistance by taking out a loan. The loan is typically taken out against any winnings or settlements from legal proceedings, so if the case is unsuccessful, the loan does not have to be repaid. However, if the case is successful and the loan is not fully repaid as agreed, significant penalties may be incurred.
One of the consequences of missing a payment on pre-settlement funding is that the loan may be declared in default, which can lead to a number of negative consequences. When a loan is in default, it means that the borrower has failed to make the required payments as outlined in the loan agreement. As with any loan, when a pre-settlement funding loan is in default, it will have a negative effect on the borrower’s credit rating. This can limit their ability to borrow money or take out financing in the future, as lenders may not be willing to lend money to borrowers with a bad credit score.
The loan may also be subject to late fees, additional interest charges, and other penalties that could dramatically increase the loan balance and accrued debt. Additionally, the loan may be sent to collections and pursued with aggressive debt collection tactics such as wage garnishment and levies on bank accounts and personal property. This can be extremely stressful and disruptive, and add more financial strain on top of an already difficult situation.
It is important to note that pre-settlement funding is a type of loan, and should be treated as such. Just as with any type of loan, borrowers should make sure to read the loan agreement carefully and understand the repayment process. Borrowers should also be aware of their payment due dates and plan ahead for their repayment obligations. This way, if unexpected circumstances arise, then the borrower can make arrangements to avoid missing a payment.
If a payment is unable to be made, it is important to contact the lender as soon as possible. Many lenders are willing to work with borrowers to come up with an appropriate repayment arrangement or other solution to help avoid the negative consequences of a missed payment. However, if a payment is delayed for too long or if the situation worsens, then it is important to seek legal advice to help protect the borrower’s rights and interests.
In summary, missing a payment on pre-settlement funding can have serious consequences. Although the lender may be willing to work with the borrower to try to avoid the repercussions of a missed payment, it is still important to plan ahead and be aware of the potential penalties associated with defaulting on a loan.
