Pre-settlement funding can be beneficial for accident injury victims pursuing legal action in a variety of personal injury claims, including car accidents, product liability, and medical malpractice.
While you can get more than one pre-settlement cash advance, the total value of pre-settlement funding you can obtain is typically pegged to a fixed percentage of the estimated value of your case, normally between 15% and 20%.
Am I Entitled to More Than One Pre-Settlement Loan?
If you have been wondering, “How many pre-settlement loans can I get”, you can apply for more than one pre-settlement loan, provided this remains below 20% of the lawsuit’s anticipated value.
This limit is intended to protect both you and the lending company. Pre-settlement funding is a form of non-recourse financing, meaning you do not repay the cash advance unless you win your case.
What Is Pre-Settlement Funding?
Pre-settlement funding is often referred to as lawsuit funding, legal funding, or lawsuit loans.
Despite the name, lawsuit loans are not a loan at all. The ability to receive funding is purely dependent on you being involved in a personal injury case. If this applies, and if you are represented by a lawyer, you are likely to be approved for a lawsuit loan.
This non-recourse financial product is a cash advance, then, rather than a loan. Approval is predicated on the strength of your case, as well as the severity of your injuries, and the extent of your losses and damages. Rather than making monthly payments as you would with a bank loan, instead you repay the cash advance in full if you win your case. If you lose your case, you pay nothing. This is one of the primary reasons for the limit of 20% of settlement value imposed on pre-settlement funding.
You can use the subsequent cash advance for any purpose. Many people taking pre-settlement funding use the cash for:
- Daily living expenses
- Medical treatment
- Rent or mortgage payments
- Tuition fees
What Are The Criteria For Lawsuit Loan Applications?
If you are a plaintiff with a lawyer representing your claim for compensation, you are likely eligible for a lawsuit loan.
This type of funding can be useful in personal injury cases, employment disputes, labor law disputes, product liability and medical malpractice lawsuits.
The one inflexible requirement is that you have legal representation. This protects the funding company as a lawyer is unlikely to take on a weak case. This will anyway work to your advantage. Not only will a lawyer help you to achieve a superior settlement, but the contingency nature of legal fees means you pay nothing until you receive your settlement or award.
Why, then, might someone want not just one lawsuit loan but more than one of these cash advances?
Why Would Anyone Need a Second Lawsuit Loan?
There is no fixed timeline for a trial concluding, and all lawsuits are different. This means that some cases can drag on for months or even years.
In many cases, people find themselves looking for additional pre-settlement funding. Some of these scenarios include:
- Medical bills becoming higher than expected.
- Discovering additional accident-related injuries.
- Difficulty finding work or inability to work as much due to accident injuries.
- Receiving unexpected bills you cannot pay.
- Waiting on disability approval.
If you are injured in an accident, it can be tough to accurately predict the cost of bills and medical expenses. Situations sometimes change, too. If they do, how can you go about getting an additional lawsuit loan?
How to Take Out a Second Pre-Settlement Loan
Most legal funding companies will fund anywhere from 10% to 20% of an anticipated settlement.
This limit serves to protect the lender, as they are already exposed to risk by the non-recourse nature of this financing. The limit also ensures that you will have enough left from your settlement after all medical liens, legal fees, and pre-settlement funding is paid off.
If you initially borrowed less than this percentage of your expected settlement, your current legal funding company might review your application for an extension on funding. Similarly, if it becomes apparent that you could recover more than initially anticipated, you may be eligible to borrow using revised estimates of your settlement value based on new evidence.
Is It Possible to Obtain an Additional Pre-Settlement Cash Advance From a Different Legal Funding Company?
While it is possible to obtain pre-settlement funding from a different lender, you are not permitted to have multiple legal funding agreements from more than one lender.
However, receiving funding from another company will not keep you from getting a loan. If anything, the fact that you have already gotten a loan sends a signal about the strength of your case. Of course, the funding company will review your case in light of the settlement funding that you have already received. However, in many cases the initial loan will be for less than the full funding value of your case. Many plaintiffs will get two or more loans because cases can drag on, and expenses could be greater than expected. This is not something that is unusual. There are limits to what you can take in a first advance, and you may need more money when your personal injury case could take years to resolve.
One way that you can get approval from a second funding company is if you refinance your initial settlement loan. Depending on the terms of your existing pre-settlement advance, this could actually be beneficial. Refinancing your existing loan while taking out new money could help you get a lower rate.
How refinancing works
Refinancing is the same as another loan company paying off your initial loan and then lending you money themselves. Each lawsuit funding loan will have a payoff amount that can repay the loan before your case settles or the jury makes an award. You would contact a refinancing company, which would then obtain the payoff amount from the original loan company. They would make full payment to that provider. Then, you would have an outstanding loan with them on new terms. The second company would then review your case to see if they can give you the extra money that you need.
Refinancing can help you in several ways. Once you have taken a loan from one funding provider, you may be tied to them by contract for the rest of your case. If they reject your application for a second loan, you may be stuck with them and not able to get any extra money. However, another provider may be looking at your case differently and are willing to lend additional money. Having another funding provider refinance and buy out your loan would give you a chance at approval elsewhere, so you can take a second loan.
What Can You Do If a Lending Company Rejects a Request for Additional Funding?
If the total loan amount requested exceeds 20% of the expected value of your settlement, your request for funding is likely to be denied.
If one funding company rejects your application for funding, you may find another company will offer you a cash advance, but not if the amount exceeds the limits in place.
What factors determine whether or not I am approved for additional pre-settlement funding?
The litigation funding company is making a very quick decision with what could be a large amount of money. They will look at each case on its own in a very short period of time. Since we promise a quick turnaround, we are taking a risk when approving another litigation loan. This is part of the customer service that we provide. Since we are a transparent lender, we will let you know exactly how we will be looking at your case.
Is your case settled or pre-settlement?
Settled cases are much less of a risk for the underwriter. They are giving an advance on something that has already been agreed upon, and they will not be taking a chance that you receive nothing. However, most personal injury cases that Uplift funds are pre-settlement. Our experienced underwriting team has no issues determining the likely settlement value of your case even before any demands or offers have been made.
What is the value of your personal injury case?
The biggest concern for the underwriter is that the litigation funding company is to be able to be repaid. They do not want to give you more than the case is worth in general because then they would not be able to recoup their investment. You are usually limited to a certain percentage of the estimated value of the case. The underwriter will use their assessment of your case’s worth as a potential cap for the amount of your loan on your personal injury case.
What are you expected to net from the lawsuit?
We will review all of the possible damages in your case. This includes your medical bills, lost wages, and pain and suffering damages. Net means how much is left over after your attorney’s fees and medical bills are paid. Legal funding companies need to ensure that there is enough money left to pay back the loan, so they are looking at the amount that would go into your pocket after all fees are paid. Because of our low rates and simple interest, Uplift Legal Funding is actually able to provide a higher loan amount as a percentage of the value of your case than many other funding companies. We can advance as much as 25% of the net amount you are expected to receive from your lawsuit.
When is your personal injury case likely to settle?
The closer your case is to settlement, the greater the chances that your loan will be approved. You can even receive more than the usual maximum amount of the loan if your case has already settled and you are waiting for your check. If your case is nearing settlement, there is less risk for the underwriter. Your case may go up in value the closer you get to a settlement, allowing you to take out more in loans against your eventual settlement. The further out you are from a settlement, the more risk there is to the lender. A litigation funding company is looking for cases that have certainty in the liability, and all that is left is to negotiate an amount of settlement.
How many lawsuit loans have you received so far, and how much do you owe back?
Funding companies do not want to overfund the case. Lawsuit loans are non-recourse loans, meaning that if you do not win your case or do not recover enough money, the funding company cannot come after you for the money. Therefore, they will be careful about how much they put out. If you have already funded a large portion of what you can expect from your case, a funding company may be more cautious.
What are the interest rates for 2nd+ lawsuit loans?
The interest rate that you pay depends on the factors that are listed above. The lender may give lower rates when you have a case that is already settled or is very close to settlement. One reason to go with Uplift Legal Funding when you are seeking a second litigation loan is that we offer extremely competitive interest rates. We can give you a rate as low as 15%, which is far less than some of the leading companies in the business. Not only that, but we only charge simple, non-compounding rates, further saving you money.
While the interest rates may vary, one thing that remains the same is that you will get a guaranteed quote from us as soon as you call. We will be fair and reasonable, unlike many major lawsuit loan companies that can get away with charging exorbitant rates and fees. Your application will be evaluated on a case-by-case basis, but you can have confidence that we will quickly review your case and give you a reasonable quote.
Repaying a Lawsuit Loan
Lawsuit loans are not like traditional bank loans. Indeed, lawsuit loans are not loans at all. What this means is that you won’t need to worry about payment schedules or penalties for late payment, and you won’t pay anything back until you win your case and receive damages.
Once your case settles, your attorney typically receives your court award or settlement. The law firm pays this check into a trust account until it is cleared by the issuing bank. At this point, legal fees and the amount of any lawsuit loans needs to be deducted from the settlement amount. Your attorney will make these deductions and payments and will then furnish you with the remainder of the settlement.
How to Get a Lawsuit Loan
Fortunately, obtaining pre-settlement funding is straightforward. You won’t need to worry about your credit score, and you won’t need to prove your income or job status either.
The application process is quick and easy, typically paperless and taking as little as 48 hours.
When you first contact a legal funding company, you need only supply the basic facts of your case and the contact information of your attorney. This is the limit of your involvement.
The funding company will then review your case and contact your law firm. Your application will be based entirely on the strength of your claim and your expected settlement value. You can expect funds within as little as a few days. If you then require further pre-settlement funding, you can apply for a second lawsuit loan, as long as your total borrowing falls within the stipulated limits.