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Dealing with debt problems can indeed be a trying experience. People with multiple debt problems often find it difficult to avail a loan. Such borrowers are often turned down by lenders. Debt consolidation loan guarantee offers a ray of hope to such borrowers. With these loans, a borrower can easily consolidate multiple debts into one single loan. Generally when trapped in debts, people take more loans to clear their existing debts, without realizing that debt consolidation might simply solve most of their debt problems! Debt consolidation helps in consolidating all debts into one single payment. One can also enjoy a loan at a lower rate of interest.

These loans will help a debtor come out of all high interest debts. A borrower just needs to pay a single monthly installment unlike paying a number of creditors and lenders! Immediately, the borrower will be stopped being harassed from creditors. Basically, a debt consolidation loan is a loan taken to pay off several smaller loans. While using the larger loan, you end up with only one payment, which is usually lower than the sum of all your smaller debt payments. Debt consolidation loan reduces the amount of money that a borrower pays and the amount of payments that is made. The basic purpose of debt consolidation is to speed up your paying time and also help lower monthly bills.


So your dream of having a successful business have perished (for now at least). You’ve made the difficult decision to close your doors for good, as your losses have mounted, month after month. After much soul searching, you have conferred with business partners, advisors, and your family, finally reaching the conclusion that the current version of your business is a far cry from what you imagined it would be. Bottom line: It just ain’t worth it any more.

Unfortunately, closing your doors is only one small part of this process. When you took that business loan to finance your business, you signed a personal guaranty. That guaranty states unequivocally that you will personally repay the loan in the event that the business cannot. Of course, that business was your sole source of income, so there is no way you can continue to make payments on it.

So now what?

Once the business is closed, and all the business assets are sold, it’s time to think about settling your debt. In the present economy, more than ever, banks are willing to settle outstanding debt. Why? Because it costs money to sue you. It costs money to sic a collection agent on you. It costs money to collect on a personal judgment. It costs money to foreclose on you. In other words, if you come to the table, they are willing to talk.

So settling debt is great for banks, but what’s in it for you?

1) No Personal Judgments – When a personal judgment is granted against you, this means that whoever the judgment is in favor of has the legal right to take your personal assets and sell them. In most cases, if the debt is settled right after business closure, the bank will not seek a personal judgment against you.

2) No Need For Bankruptcy – If you can work out a deal with a bank, you won’t need to worry about the bank coming after you. Remember, if you go the BK route, it will remain on your credit report for years, and you will always need to answer “yes” on any credit application, job application, or even apartment application for the rest of your life. BK is the right answer for some, but not a necessity for everyone. Settling debt shows that while you did not fulfill the obligation in full, you didn’t simply walk away either.

3) Move On With Your Life – As many small business owners can attest, the psychological burden of wondering if or when the banks lawyers will come calling is just as bad as whatever might actually happen. Settling your debt can put the potential of future litigation to rest, so you can move on to your next venture.

4) Prevent Foreclosure – If you pledged your home as collateral for your business loan, you run the risk of foreclosure if the bank feels that there is sufficient equity in your home to do so. Even if there is no equity in your home, the bank can simply wait until you go to sell it, at which point you will need to negotiate a release of the lien. (Note: there’s not reason that you can’t negotiate the release of a lien on your home sooner than later).

5) Keep Your Home Free of Liens – Even if you didn’t pledge your home originally, once a lender obtains a judgment against you, they can seek to have a judgment lien place on the home. Again, this would mean that the lien would need to be satisfied if you ever try to sell your home.

There are dozens of companies that provide legal financing in the United States and abroad. Legal financing can be used by both the plaintiff and the attorney. If you are considering borrowing against your lawsuit, it will be imperative you understand the different types of options. There are no two companies alike as many prefer different types of cases, different rates, and different financing options at different amounts. In this article we will discuss the different types of cases, different rates, amounts and financing options.

Legal financing is offered on a pre settlement and post settlement basis. This means a client can borrow money before or after a case is settled. The different types of cases that are offered by these companies are personal injury and commercial litigation cases. A personal injury may be an auto accident, wrongful death, slip and fall and medical malpractice. A commercial litigation claim may be securities fraud, copyright infringement, patent infringement and financial malpractice.

While most companies in the United States prefer personal injury related cases, most outside of the states prefer commercial cases.

The rates are also different between the different types of cases. A company may lend money on a compounded monthly rate, quarterly compounded, flat rate, times factor and a percentage of the proceeds plus the principle of the loan. Most companies that provide legal financing against personal injury cases will offer compounded monthly rates, flat rates or quarterly rates; Companies offering clients legal financing against commercial cases may offer compounded or quarterly rates, time’s factors or percentages on a case. The companies that provide money against personal injury cases tend to charge less than those companies offering financing against commercial cases. All companies tend to charge better rates on cases that are already settled. This is because there is less risk to the investor.

The amounts are also different for each company. There are companies that will lend just a few thousand on a case and others that will provide lawsuit loans for million dollar request. The amount of money will be dependent upon the type of case, estimated value of the case and the comfort on the underwriter.

The different financing options may include a lump sum, buyout or line of credit. If a person is borrowing a lump sum they may max out the initial advance. This means the plaintiff is borrowing the maximum amount that a company will provide on one case. There are other companies that will buyout an existing legal financing contract. A company will always want to hold the first position or lien on the case so the only way to borrow additional monies from another company is for the company to buy out the existing contract from another company. If you decide to borrow a small fraction of what your case is worth you may open a line of credit. A line of credit is used as a way to only borrow what you need with an option of coming back at a later date for an additional advance.