The Georgia Supreme Court will hear a case that could decide whether lawsuit lending arrangements actually qualify as loans under state law and are subject to regulation.
Ruth v. Cherokee Funding, LLC will examine the high interest rates that typically come with these arrangements. One of the plaintiffs said he was asked to repay $84,000 after receiving only $8,000 from Cherokee Funding. Another plaintiff said she was asked to repay 250 percent of her original loan after only two years. Oral arguments will start in May.
Lawsuit lending, in which firms offer cash in exchange for settlement money and interest, has been in the public and legal eye in recent months. The Colorado attorney general announced a $2.3 million settlement last month with lawsuit lending firms that charge “predatory interest rates.” A New York Post exposé found a lawsuit lending firm was charging interest rates as high as 124 percent.