Hard Money as Capital for Legal Settlements and Judgment Financing

If you are familiar with the hard money concept, you probably wouldn’t be surprised by a private lender funding the acquisition of an attractive piece of commercial real estate. Investors turn to hard money all the time for such acquisitions. But what about hard money as capital for legal settlements in judgment financing? Is it doable?

In a word, yes. Although Utah-based Actium Lending explains that most hard money loans are dedicated to real estate acquisitions, lenders are free to write loans for any purpose. Some are happy to fund legal settlements and judgment financing.

Loans Are Based on Assets

Firms like Actium Lending base their loans on borrower assets. In other words, the loans are backed by some sort of high-value asset – usually real estate. The property being purchased would act as collateral on a real estate loan. A loan dedicated to a legal settlement or judgment financing would typically be backed by a piece of property the borrower owns.

Being asset-based makes hard money lending open to all sorts of needs. From the lender’s perspective, it is all about collateral value. Lenders do not have to look at a borrower’s creditworthiness, credit history, business income, etc.

Settlement and Judgment Scenarios

Specifically where settlements and judgments are concerned, hard money offers some pretty attractive benefits. Let us take a closer look at both types of scenarios:

1. Paying a Settlement

The losing party in a civil trial resulting in a money judgment is known as the judgment debtor. A considerable judgment against the debtor could leave that person or organization open to serious financial exposure. To limit the exposure, a debtor might propose an immediate settlement.

The key to making it work is paying the settlement amount right away. The debtor might secure a hard money loan by offering real estate as collateral. Because a hard money loan can typically be funded in a matter of days, a debtor can quickly pay and put the judgment behind him.

2. Judgment Purchase

Money judgments are considered assets under the law. They can be bought and sold just like real estate. Investors sometimes purchase judgments for less than face value, then turn around and collect the entire amount to generate a return. Hard money provides the capital for judgment acquisition. It’s fast, clean, and simple.

Why Hard Money Is Ideal for Legal Funding

Turning to a hard money lender to pay a settlement or fund judgment acquisition might seem odd. But there are particularly good reasons for doing so. At the top of the list is funding speed.

Actium Lending explains that hard money loans can typically be approved and funded in under a week. There have even been a few occasions on which Actium was able to get things done in a single business day. The thing about legal funding is that it’s often time-sensitive. Hard money can be arranged very quickly where traditional bank financing can take months.

Hard money is also ideal for legal funding because:

• Lenders are willing to fund non-traditional needs.
• Lenders are more willing to take risks that normally make banks nervous.
• Lenders have more flexibility in how they structure loans.
• Asset-based lending can be tailored to the most complex financial situations.

Being on the losing end of a money judgment is not an ideal situation. But working out a settlement via hard-money financing can ease the pain of losing. Likewise, hard money is a viable option for financing the acquisition of an outstanding judgment. In short, hard money works very well for funding legal needs quickly and efficiently.