Can I Borrow Money From My Settlement

Can I Borrow Money From My Settlement?

Lawsuits often take some time to conclude, even if you have a strong claim and robust representation.

The ABA (American Bar Association) reports that in personal injury lawsuits, like other tort cases, it can take anywhere from 3 months to 24 months before you receive the financial compensation you are due.

Unfortunately, you could be unable to work in the aftermath of a workplace injury, or you may find yourself unable to pay mounting medical bills. Other expenses can start piling up, too, if your income is suffering as a result of an injury at work.

Being forced to wait such a long time for financial redress causes enough pain and suffering in its own right. To compound the issue, you could also find yourself exposed to the temptation of taking a low-ball offer from an insurance company to settle early and get at least some financial respite.

Can you borrow money from your personal injury settlement, then?

Is it possible to borrow money from a personal injury settlement?

If you are worried about expenses while waiting for a lawsuit, you can borrow money against your lawsuit, assuming your case is solid enough to win.

This type of borrowing is effectively a cash advance, allowing you to borrow on the strength of pending settlement proceeds. The non-recourse nature of the financing means you only repay the loan if you receive financial compensation.

So, with lawsuit loans, you can access the cash you need right now in exchange for a part of your pending settlement payment.

​​How much money can I borrow?

Before anything, you should determine how much money you need. When you’re considering this form of financing, you should limit borrowing to cover only what you really need – cash for past due bills or rent money to prevent eviction, for instance.

Most lending companies will lend in line with the strength of your case. There will also be minimum and maximum borrowing limits in place.

Funding typically starts at around $1,500, although you will find some companies lending amounts as low as $500. At the upper end, funding can extend above $100,000. Uplift Legal Funding, for example, can provide lawsuit loans from as low as $500 to more than $250,000.

As a general rule of thumb, You can typically obtain legal funding for up to 15% of the value of your claim. Most funding companies offer somewhere between 10% and 15% of estimated gross settlement value. Variables like procedural status, insurance coverage, and the severity of your injuries will impact the overall value of your claim.

To reiterate, it is important to limit pre-settlement funding to legitimate needs.

Why do plaintiffs borrow money against a pending case?

People consider pre-settlement funding for many reasons, including:

  • Rent
  • Utility bills
  • Medical bills
  • Education costs
  • Family costs
  • Eviction
  • Transportation

What steps are required for lawsuit borrowing?

There are many legal funding organizations offering pre-settlement loans, but the steps required for lawsuit borrowing are broadly similar regardless of the lender.

You will need to verify your claim and you will also need to secure legal representation then supply the lender with details of your attorney.

The steps involved to obtain pre-settlement funding are straightforward:

1. Apply for funding by filling in an application form. You can usually accomplish this online as soon as your lawyer has filed your lawsuit.

2. Speak with the lender to confirm the information provided.

3. Your attorney provides the lender with a copy of your case file.

4. The lender’s underwriters evaluate the strength of your case.

5. Assuming your claim is strong, you will receive a contract in the form of a funding agreement.

6. Sign the agreement and wait for your pre-settlement loan to arrive, either via direct bank deposit or check.

When will I receive the funds?

While you can expect to receive funds from a settlement loan quickly, most companies will not deliver funds on the same day as you are approved.

With most funding companies, it will take at least 24 hours to process the loan, assuming all the documents required are in place.

Expect the process to be quick and seamless if you have a solid case with clear liability and an attorney who is willing to work with the funding company.

If the funding company is sending funds via bank wire, Western Union or Moneygram, you should be able to expect funds the same day you sign your contract.

Fortunately, monies from injury settlements or workers’ compensation settlements are considered exempt.

In plain English, creditors cannot take these monies via bank garnishment.

Beyond this, you get to keep the entire settlement even in the event of filing bankruptcy, and even if the settlement amounts to a few thousand dollars.

That said, you need to take some simple steps to ensure your personal injury settlement is safeguarded.

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Managing Member at Uplift Legal Funding
Jared Stern is an experienced financial professional with six years of experience in the pre-settlement funding industry. After graduating from UC Berkeley with a degree in economics in 2014, Jared began his career in Morgan Stanley's mergers and acquisitions investment banking division. After working with another pre-settlement funding company for two years, Jared founded Uplift Legal Funding in 2017 to give injured plaintiffs a better choice in lawsuit loans. Check Jared out on: LinkedIn | Legal Reader | Attorney At Law Magazine
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