Important Notice: Our web hosting provider recently started charging us for additional visits, which was unexpected. In response, we're seeking donations. Depending on the situation, we may explore different monetization options for our Community and Expert Contributors. It's crucial to provide more returns for their expertise and offer more Expert Validated Answers or AI Validated Answers. Learn more about our hosting issue here.

Why is advancing funds against a pending lawsuit not considered a loan?

April 26, 2017advancing funds lawsuit loan

0

Posted

Why is advancing funds against a pending lawsuit not considered a loan?

1 Answer

0

Posted

Simply, advancing funds against a pending lawsuit requires no repayment if the plaintiff does not receive a cash settlement or award upon resolution of the lawsuit. Because all advances are made on a “non-recourse” basis, the investor forfeits their entire advance for that case if the plaintiff is not successful in their lawsuit. ALFA Members provide funding for individuals who cannot receive a loan, because they do not have the cash flow or collateral required to receive a loan.