If you are involved in a personal injury case, it can take months or even years for the lawsuit to resolve.
While it is comforting to know that the compensation you deserve is on its way, that does nothing if you have bills and expenses mounting, especially if you need time off work in the aftermath of an accident.
To combat mounting bills set against insufficient income, many people waiting for settlements consider a lawsuit loan. Lawsuit funding comes in the form of a cash advance that helps you defray expenses now in exchange for a portion of your expected settlement.
To qualify for legal funding, you will need an attorney representing your case. The risk-free nature of this funding is based purely on the strength of your case and the potential settlement, so lenders want to make certain you have a solid chance of winning the lawsuit before offering you a cash advance.
Lawsuit loans are not something you should approach without due consideration. You should explore all other avenues of financing before committing part of your settlement in exchange for cash right now. That said, in some circumstances, lawsuit loans can be the most practical and viable option.
What are Lawsuit Loans?
As soon as you have filed a lawsuit and retained legal representation, you are able to apply for a loan with a legal funding company. The lender’s underwriters will evaluate the strength of your cash, establishing how much you could obtain in the event of a settlement or judgment. The documentation you provide to the funding company will help them arrive at this decision.
If your application is successful, you will be offered a sum of money as a cash advance on the strength of your forthcoming settlement. You sign an agreement to repay this money with interest if you receive a settlement. If you do not win your case, you repay nothing.
Lawsuit loans go by many names including:
- Lawsuit funding
- Pre-settlement funding
- Settlement funding
- Litigation financing
- Lawsuit cash advances
While often referred to as loan, lawsuit financing works differently to traditional loans. The non-recourse nature of this financial product means you repay nothing unless your case resolves. In this sense, a lawsuit loan is a cash advance rather than a regular loan.
These are the most common types of cases eligible for litigation funding:
- Auto accidents
- Personal injury claims
- Workplace injuries
- Premises liability (slip and fall)
- Product liability
- Medical malpractice
- Wrongful death
[LEARN MORE]: How Long Does It Take To Get Money After A Settlement?
Benefits of lawsuit loans
A lawsuit loan may not always be a wise idea. You should speak with your attorney and ask for advice if this form of financing is something you are considering.
The most important element to consider is the interest payable. This typically compounds monthly, meaning you could pay back double what you borrow if your case takes a year or more to resolve.
Only you can decide whether it’s worth sacrificing a portion of a future settlement in exchange for a cash injection now.
Consider the following benefits of lawsuit loans to help you decide if this financial product is right for you:
- Lawsuit loans are quick and hassle-free
- Litigation loans extend a cash lifeline
- You can use a lawsuit advance to get quality medical treatment
- Lawsuit loans protect you from being offered a lowball settlement
- Lawsuit funding is completely risk-free
Lawsuit loans are quick and hassle-free
If you need money in a hurry, lawsuit funding can sometimes be approved the same day you apply and will typically be processed in just a few days.
Settlement companies will not consider your credit history, and they will not run a credit check. You will not need to provide employment verification or proof of income either. Not only does this widen access to lawsuit loans, but it also means the application process is much quicker than that of a traditional loan.
Using documentation your attorney provides, the funding company will assess your case and likely payout before deciding whether to offer you a cash advance, and how much to offer you.
Litigation loans extend a cash lifeline
You will receive your cash advance by direct deposit, check, or money order within days of application, assuming you qualify for funding.
The speed of funding means lawsuit cash advances can help you meet expenses like rent, food, and bills, while also coping with medical expenses and the cost of prescription medications after an accident in the car or at work.
For anyone confident of receiving a settlement, lawsuit loans act as an immediate financial lifeline, albeit sometimes at a high cost.
You can use a lawsuit advance to get quality medical treatment
Many people use lawsuit loans to defray the cost of unexpected medical expenses like imaging studies or surgical procedures. Indeed, lawsuit financing for medical expenses is one of the primary reasons for people seeking settlement loans.
With no restrictions at all placed on the way you use settlement funding, and liquidity delivered prior to settlement, you can obtain the medical care you need, even if you don’t have adequate health insurance.
Lawsuit loans protect you from being offered a lowball settlement
Often, unscrupulous insurance providers pressure the victims of accidents and injuries into settling for an unfairly low amount, preying on the fact people are frequently looking for an immediate resolution.
Sometimes, insurance carriers are obstructive, delaying litigation and dragging out the settlement process, hoping plaintiffs cave in to lowball demands out of financial need.
By taking out pre-settlement funding, you buy yourself some valuable breathing space, protecting yourself from weak offers and allowing you to seek the compensation you deserve.
Lawsuit funding is completely risk-free
Perhaps the leading benefit of lawsuit loans is the 100% risk-free nature of this kind of financing.
As a non-recourse cash advance, you will only repay the money borrowed if you win your case.
Your attorney should help you decide whether a lawsuit loan can help you, or whether you should pursue other avenues of funding.