Personal injury lawsuit loans, also known as pre-settlement funding for injury claims, have many benefits. During a period when you may be struggling to make ends meet, to try to ensure your family can eat, that you have a place to sleep, and that the lights stay on while your personal injury case drags on for what seems like decades, pre-settlement funding can mean you and your family can financially survive.
What is a personal injury lawsuit loan?
A personal injury lawsuit loan is an advance a plaintiff gets from an upcoming settlement. To qualify for one, funding companies will look at factors such as the merits of the case, its value to secure the loan, and the approximate time the claim will settle, among other factors. Rates and fees will be based on these underwriting factors.
Your credit score and income are not part of the criteria.
Let’s spot the shining light on the top 4 benefits of personal injury lawsuit loans.
1) Personal injury lawsuit loans can help to tide you over while you wait for your case to resolve and can help you hold out to receive your case’s true value
Pre-settlement funding can be used for any purpose except for paying your attorney’s fees. It ensures you have a chance to pay the rent, buy groceries, and/or pay shelter while you wait for your personal injury case to settle.
Alternatively, you could use it to pay for much-needed medical care.
Often if you were injured because of someone else’s negligence, you would not have any income, meaning that the only means you have of obtaining income is through a loan or financing of some sort. This is where this type of financing comes in.
Obtaining funding can also ease the pressure so that you do not feel compelled to accept the first settlement offer that comes your way.
If you obtain a loan on your case, then you are not so strapped for money that you feel no choice but to accept a lowball settlement from the person who injured you.
Obtaining financing can assist you in taking the time to ensure you receive an amount commensurate with the value of your claim because your day-to-day needs are taken care of while you let your attorneys prosecute your lawsuit.
2) Some personal injury lawsuit loans carry low-interest rates
Personal loans, maxing out your credit cards, or other forms of credit or financing are often not viable alternatives if you are a party to a lawsuit because you will quickly get in overhead financially.
However, as a personal injury lawsuit plaintiff, you may feel like you have no other alternative because you have no income coming in the door due to your injuries. Your mortgage or rent is due every month, you need to buy groceries, and you have bills.
In contrast, these loans are beneficial if you get them from a legitimate funder like Baker Street Funding since they come with much lower interest rates than virtually any other type of litigation financier.
3) Injury loans are non-recourse, meaning you will not lose your house or car if you do not win your case
Pre-settlement funding also is non-recourse. This means that the lender cannot go back after you for repayment if your case does not resolve in your favor. This makes it unlike a mortgage, in which a lender can foreclose upon your home if you do not pay the loan you borrowed, or a vehicle loan, in which the vehicle can be repossessed if you do not make the required.
In non-recourse legal funding, the lender is making the loan to the borrower with the expectation that the plaintiff will obtain a recovery in their lawsuit, whether through a jury trial or through a negotiated settlement.
On the other hand, if everything goes south, the lender is the one left holding the bag. This is one reason that personal injury lenders will scrutinize each potential borrower very carefully on the front end during the application process to ensure that they truly have a strong case and there is a high likelihood that the lender will be repaid.
4) Personal injury lawsuit loans are typically not taxable
Unlike most forms of income, like a paycheck, winning the lottery, or gains from most investments, a personal injury lawsuit loan is also generally not taxable for someone who receives financing and then settles their case and, in the process, pays back the funding that was extended.
The rationale for this is the same rationale that a personal injury lawsuit proceeds to a victim is tax-free: the person has been injured and may have physical impairments as a result, and, consequently, the recovery from a lawsuit is seen as making the person whole for their injuries. It is not viewed as something the person “earned,” like a paycheck.
The Takeaway
Personal injury lawsuit loans help to ensure you are not in a financial position where you must take the first settlement offer that comes your way from the person that injured them or their insurer just because you need the money that badly.
Pre-settlement funding is also non-recourse, meaning that the lender cannot pursue you for repayment of the loan if, for whatever reason, your personal injury case does not resolve in your favor. And unless you do not prevail in your legal case or use the proceeds of the loan to make an investment, personal injury lawsuit loans are not taxable.
Lastly, some injury loans carry much lower interest rates than other companies, so it is important that you look for a legitimate lender before funding your injury case. Never pay more than 42% annum for your loan, and ensure the rates are capped.
Baker Street Funding offers competitive, fixed rates and caps. Applying takes just one minute. Learn more about Baker Street Funding settlement financing.
