Interest: Money regularly paid back at a particular rate for the use of borrowed money.
Non-recourse funding agreement or pre-settlement advance: An advance of money for which a person uses his or her lawsuit as collateral. Funding companies agree to only look to the proceeds of the lawsuit and not any of the borrower’s personal assets.
Nonprofit: Like the Bairs Foundation, a nonprofit (or not-for-profit) organization does not distribute income to its shareholders and is typically involved in charitable activities.
Non-recourse advances: Non-recourse companies do not hold borrowers personally liable for their debt. In contrast, recourse advance companies can continue to collect debt even after they’ve taken a person’s collateral. Unlike a bank, non-recourse companies are only providing monetary advances against your lawsuit.
Predatory lending: Certain unfair and deceptive practices in consumer finance industries. The New York State Attorney General offers tips for consumers to protect themselves from predatory acts.
Principal: The original amount of capital borrowed.
Recourse: The agreed-upon right to receive payment from the borrower. Whether a monetary advance comes in the form of recourse, non-recourse, or limited recourse determines whether the institution can take certain assets if repayment is not made.
Seventh Amendment: Amendment VII of the United States Constitution: “In suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved, and no fact tried by a jury, shall be otherwise reexamined in any court of the United States, than according to the rules of the common law.”
Simple Interest: Calculated as a percentage of the principal amount of capital.
Term: The length of time until final repayment of financial assistance.
Usury: The illegal action or practice of lending money at unreasonably high rates of interest. Most state laws prohibit companies from charging high rates. For example, in New York state charging, taking, or receiving interest of 25% or more is criminal usury.