Why You Should Only Borrow What You Need (Not What You Qualify For)
3 mins read
Published Apr 2, 2025
The Temptation of "Easy Money"
When our underwriters review your case, they might determine that your claim is worth a significant amount. Consequently, you might "qualify" for a $10,000 or $20,000 advance. It is very tempting to take the full amount, especially when you have been struggling financially.
However, we strongly advise our clients to pause and calculate. Remember: This is expensive money. Because it is non-recourse (high risk for us), the cost is higher than a standard bank loan. Borrowing money you don't strictly need right now is throwing away future settlement dollars.
Protecting Your "Future Self"
Every dollar you borrow today is a dollar (plus interest) that won't be in your pocket when the case settles. If you take $10,000 now to buy luxuries or non-essentials, you might be shocked to see how much comes out of your final check.
The smartest strategy is to calculate your "Survival Number." How much do you need to pay rent, keep the lights on, and buy food for the next 3-6 months? If that number is $3,000, then borrow $3,000—even if we offer you $10,000.
You Can Always Come Back
One thing many plaintiffs don't realize is that funding doesn't have to be a one-time event. You can treat it like a line of credit.
If you take $2,000 today and realize six months from now that the case is still dragging on and you need more, you can apply for an additional advance. This strategy, called "Staged Funding," saves you a fortune in interest because you aren't paying interest on money sitting in your bank account that you didn't need yet.
