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 to 24 months before you receive the financial compensation you are due.

Unfortunately, you could be unable to work in the aftermath of a personal 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 your injury.

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 tempted to take a lowball 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 to settle, you can borrow money against your case, assuming your claim 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 as soon as the same day in exchange for a portion of your pending settlement payment.

How much money can I borrow?

Before anything else, you should determine how much money you need. When 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 based on the strength of your case. There will also be minimum and maximum borrowing limits in place.

Funding typically starts at around $1,500, although some companies lend amounts as low as $500. At the upper end, funding can extend above $100,000. Uplift Legal Funding, for example, can provide lawsuit loans ranging from $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 the 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 prevention
• 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, secure legal representation, and supply the lender with your attorney’s details.

The steps involved in obtaining pre-settlement funding are straightforward:

1. Apply for funding by completing an application form. You can usually accomplish this online once 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 the same day you are approved.

With most funding companies, it will take at least 24 hours to process the loan, assuming all the required documents 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 or Western Union, you should be able to expect funds as soon as 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 if you file for 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.

[LEARN MORE]:

• Can I get a loan from my workers’ comp settlement?
• Can creditors take my personal injury settlement?