If you find yourself facing an unexpected financial crisis stemming from a personal injury lawsuit, a wrongful conviction claim, or a discrimination case, you may not be aware of lawsuit loans.
This form of financing can give you the cash you need to meet medical bills, the cost of medications and rehabilitation, as well as routine expenses. After all, if you have been involved in an accident, you are likely to need time off work and your income could take a hit.
This guide outlines what to expect from lawsuit funding so you get find out how to get a lawsuit loan. You can also determine whether this form of funding is right for you.
Is a Lawsuit Loan Good for You?
Car accidents can lead to severe economic and physical damages. While you should eventually get the compensation you deserve, many claims take months or even years to resolve.
In the meantime, you’re faced with medical bills and other unexpected expenses as well as all your usual outgoings, and you may also need time off work.
Lawsuit loans are one solution if you don’t have savings or access to traditional avenues of lending.
The non-recourse nature of settlement funding gives you access to cash now with no risk. If you win your case, the lender receives a pre-agreed portion of the settlement. If you lose your case, you repay nothing.
As a cash advance, there is no stipulation on how you use the funds from a lawsuit loan. Most plaintiffs use the money for any or all of the following:
- Daily living expenses
- Legal fees
- Medical bills
- Prescription medications
- Car payments
- Rent payments
The primary drawback of lawsuit loans is the cost, and this is largely due to the non-recourse nature of settlement funding. The lender typically charges interest rates of anywhere from 3% to 4% monthly. This interest is usually compounded monthly, though, meaning it can spiral into an annual interest rate of anywhere from 42% to 60% or more.
Given the often-protracted nature of personal injury claims, these costs can mount. You should look closely at this before committing to a lawsuit loan.
While this non-recourse funding is a cash advance rather than a loan, this means the lawsuit loan marketplace is not highly regulated so you should proceed with caution.
How do Lawsuit Loans Work?
The way lawsuit loans work is straightforward. A lawsuit lender will review your case. There is no credit check or income proof required. If the lender feels your case is strong, they advance you a portion of your anticipated settlement. If you lose your case, you repay nothing.
Also, if you end up settling for less than expected, your repayment obligation will be proportionately lowered.
While interest charges can pile up if the case drags on, you will not have to repay more than you won in the settlement minus your attorney’s fees.
You can get lawsuit funding for all types of car and traffic-related lawsuits. You should also qualify for settlement funding if you have been injured because of another driver’s negligence.
To qualify for lawsuit loans, you will need to be over 18 and you need to have retained an attorney on a contingency basis. You must also have a valid claim, either against an insurance company or another self-insured entity.
The value of a settlement for a road traffic accident is directly linked to the extent of your damages.
If the defendant has adequate insurance coverage in place, you should qualify for more legal funding if you have more serious injuries.
Five Steps to Getting a Lawsuit Loan
If you feel a lawsuit loan makes the right choice for you and your circumstances, the process of obtaining settlement funding is straightforward.
Step 1: Get in Touch with A Lawsuit Loan Company
To kickstart the process, you should contact a suitable legal funding company.
Most lawsuit loan companies make it easy for you to get in touch, either online or over the phone toll-free.
Expect to provide the following information:
- Your attorney’s contact details
- The facts of your case
- This is the extent of the initial dealings you will have with the funding company as they contact your attorney next.
Step 2: The Funding Company Contacts Your Lawyer
The funding company contacts your attorney to learn more than just the basics of your case.
If you are looking to get funds promptly, you will need your attorney to respond expediently to all requests from the funding company.
The underwriters at the funding company then evaluate the strength of your case and the value of the expected settlement before making you an initial offer of a cash advance.
Step 3: Your Lawyer Receives the Agreement
Your lawyer will receive the offer agreement from the funding company, so you still do not need to do anything yourself at this point beyond arranging a conference with your attorney to review the agreement.
Step 4: You Review and Sign this Agreement with your Lawyer
Calculating the value of a claim is not clear-cut. Many variables come into play, including the scope of your injuries, as well as all economic losses sustained as a result of the accident. The value of these variables will be calculated after the consultation of medical history, medical records, medical treatments, and consultation with the plaintiff’s physician.
The other deciding factor is the validity of your claim. Is there sufficient evidence in place to show the defendant was negligent? The more evidence is in place, the greater the value placed on your claim.
Step 5: Get Your Cash Advance
You consult with your attorney to establish that the agreement is fair.
Sign and return the agreement if you want to proceed with a lawsuit loan, with funds typically issued within anywhere from a day to a few days.
Get a Quote for Structured Settlement Today
Maybe you find yourself involved in a claim where the defendant is a minor or does not have adequate insurance coverage.
This does not mean all is lost when it comes to recovering compensation, as you may be able to obtain a structured settlement. With structured settlements, you get a steady stream of payments instead of a lump sum. This can give you financial security over time and also compensation where you may otherwise have gone without.
Reach out today for more information on structured settlements.
