Download this Paper Open PDF in Browser

Borrowing in the Shadow of Death: Another Look at Probate Lending

53 Pages Posted: 11 Sep 2017 Last revised: 16 Sep 2017

David Horton

University of California, Davis - School of Law

Date Written: September 7, 2017

Abstract

“Fringe” lending has long been controversial. Three decades ago, demand for subprime credit soared, and businesses started to offer high-interest rate cash advances, such as tax refund anticipation loans, payday loans, and pension loans. These products have sparked intense debate and are subject to a maze of rules. However, in Probate Lending, 126 YALE L.J. 102 (2016), a co-author and I examined a form of fringe lending that has gone largely unnoticed: firms that pay lump sums in return for an heir or beneficiary’s interest in a pending decedent’s estate. Capitalizing on a California law that requires companies to file these contracts in probate court, we analyzed seventy-seven loans that stemmed from deaths in 2007. In this companion Article, I report the results of a study of an additional twenty-two months of probate records. My research provides hard evidence about the multi-million dollar inheritance-buying industry, including the prevalence of loans, characteristics of borrowers, how often lenders are repaid, and annual interest rates. I then use this data to compare probate lending to other species of fringe lending and to outline how courts and lawmakers should regulate the practice.

Keywords: probate loan, inheritance advance, litigation loan, payday loan, litigation finance, champerty, usury, TILA, truth-in-lending act, empirical, probate court

Suggested Citation

Horton, David, Borrowing in the Shadow of Death: Another Look at Probate Lending (September 7, 2017). William & Mary Law Review, Vol. 59, 2018, Forthcoming. Available at SSRN: https://ssrn.com/abstract=3033821

David Horton (Contact Author)

University of California, Davis - School of Law ( email )

Martin Luther King, Jr. Hall
Davis, CA CA 95616-5201
United States

Paper statistics

Downloads
78
Rank
267,310
Abstract Views
230