Are lawsuit loans worth it? Advantages and disadvantages

Are lawsuit loans worth it

Although you may have already filed a personal injury suit, the court proceedings are typically slow. Before borrowing money from your lawsuit, know when a lawsuit loan is worth it and when it might put you at risk.

What are lawsuit loans? Essentially, a settlement advance is a non-recourse funding contract that gives you access to a portion of your estimated settlement amount before your case settles. Lawsuit settlement loans are free of risk, relatively easy to obtain when your case is strong. They are available for plaintiffs involved in personal injuries and commercial litigation. All from small amounts to jumbo funds.

Sounds like a pretty sweet arrangement when it comes to borrowing money from your pending lawsuit settlement. You can use the funds to pay your medical bills or other expenses.

Having the freedom to have the needed cash until your case successfully settles could be beneficial. But if you’re thinking of applying for a settlement loan, get to know the pros and cons first. To aid in your search, here are some tips for finding the best lawsuit loan companies for your situation.

Pros and cons behind lawsuit loans

Before taking out a cash advance on your pending lawsuit, consider some of the pros and cons. 

Lawsuit loan advantages

There is no risk to the plaintiff. Risk-free loans do not require the usual collateral (like a house or a car) in case you can’t pay the loan. The only collateral a funder considers is your future settlement proceeds. Banks don’t see your case as collateral; this is why we exist. The pre-settlement funding company can’t come after you if you lose your case. Legal funding is non-recourse cash advances, so putting up an asset is not required as long as your claim is solid.

High funding amounts. Lawsuit loans come in all sorts of amounts; starting at $500 for a case worth $5000 up to $1 million for a personal injury case with a value of $10 million. Litigation claimants can get funding starting in the vicinity of $500,000, all the way up to $10,000,000. The typical pre-settlement funding company will release up to 20% of what the litigation is worth regarding corporate claims.

Fast application/approval time. Since lawsuit cash advances can be obtained through a variety of funding firms, the approval takes 24-48 hours if the funder is well-capitalized. Others take proximity of 3 to 5 business days.

Lawsuit loan disadvantages

Lawsuit loan interest rates could be higher than normal. Because lawsuit financing is non-recourse, they’re perceived by legal lenders as extremely risky, so do not expect an interest rate to be like your traditional financial institution. The rates and fees of your loan can multiply the initial rates when they are compounding. High-interest rates from scrupulous lenders may raise the chance of you ending up with only half of your lawsuit or none.

Your attorney. Though your attorney has no obligation to sign a funding contract, it is still unethical not to help clients with a company of their choice. If your attorney does not cooperate with a funder, no company will fund your case.

Your case. If the funding company feels your case has merit and either has no previous funding or room for additional funding, they will release you the amount you need to cover your expenses. But if your case is new, you most likely won’t get the funds you need.

Lawsuit settlement loans: Yay or nay?

There’s no one-size-fits-all scenario when it comes to pre-settlement funding. Make sure you explore all your financial options, including borrowing money from friends first.

When to get a lawsuit funding

Paying rent and other household bills. Using lawsuit funding to save you from getting evicted or losing your home could be an intelligent choice when borrowing against a credit card is no longer an option. If you find you have credit restraints, liquidity issues, or other obstacles to getting the money you need, then settlement funding may be the right choice for you.

Paying off medical bills. Out-of-pocket costs can stack up when you have been involved in a car accident or a slip and fall. If you visit the doctor’s office without insurance, you’ll only be getting more bills in the mail. A lawsuit loan can help pay off some of your medical expenses while you fight for the settlement you deserve.

Life-threatening emergencies. When you are involved in a personal injury lawsuit, more expenses will appear. Others are so cost-prohibitive, especially for medical malpractice, a rehab for addiction, or people with cancer, they may end up either homeless or suffering from more disease, or even worse, dead. You can pay for significant life-threatening conditions with a loan from your lawsuit. Make sure you only borrow what you need.

When not to obtain a lawsuit loan

Non-essential expenses. Some funding companies will tell you that you can use your loan on just about anything, but think twice before borrowing a pending lawsuit loan for your settlement. Buying a brand new car or using the funds for a vacation is not intelligent. Never use your loan on short-term purchases.

Remember that you may be able to take out a loan on your litigation once or twice in your lifetime. Your potential settlement payment could be your only exit to saving you from worse financial events.

Follow these tips:

  • Only borrow the money that you need from your lawsuit. Even the lowest lawsuit loan interest rates can be extremely high.
  • Focus on what matters. Don’t focus only on your pre-settlement cash advance. Incorporate it into your main essential needs only. And focus on winning your lawsuit.
  • Search for the right funder. See what kind of lawsuit loan rates companies offer. Check several lenders, too, like Baker Street Funding, Thrivest Link, or Fast Cash. They are the answer to landing a pre-settlement loan with a lower interest rate.
  • Do your due diligence. Don’t end up losing your whole settlement because you didn’t do your due diligence. Some pre-settlement funding companies on top of the search are not what you think they are. Research who they are, dig deep into their past, find out if the owner has been involved in previous lawsuits, or even worse, involved in financial crimes. It’s all public record.
  • Know what the contract says. One thing to be aware of in this process is rates. Because a settlement advance is an investment in your legal settlement outcome, the interest rate of return usually is relatively high. While we strive to provide our clients with the lowest and fairest rate possible, other companies are not client-focused. Understand the contract you sign is crystal clear. Make sure your attorney explains the agreement to you. 
  • Talk to your lawyer. Your attorney is key to your settlement funding application. Make sure that your attorney is always present and up to date with your funding application. Your lawyer helps us figure out the details of your case and estimate its value. They will also let us know if any other outstanding liens may affect the amount we can fund. After speaking with one of our representatives, we ask that you contact your attorney to let them know we will be reaching out. Fostering a relationship early in the application process always helps us reach a funding decision quickly.
  • Be aware of red flags. Does the company you contact demand you only speak over text message? Do they say they are going to call your attorney and delay in doing so? Do they give you a general pre-selected answer to every question you ask? If you don’t feel comfortable, walk away. You can always contact another legal funding company no matter where you are in the process with your current application. Even if there is a contract out for you, you can still walk away.


A settlement advance could be the life-saving financial instrument you need when you have no other option and face dire economic consequences like foreclosure and eviction.

Be sure to research and be on the lookout for what lawsuit loan companies do and don’t reveal. At the end of the day, you want to work with a company that makes you feel as comfortable as possible for a fair price.

Need to apply for funding?

To get a loan on your lawsuit you only need to have an attorney and a strong case. We are so confident in our legal funding team and our contracts’ structure that we encourage our clients to shop around when they are insecure. Most companies would not dare direct their clients to competitors when they can’t fund them, but we do. 

While it may be frustrating for your lawyer to field calls from multiple lawsuit funding companies, we are optimistic that our contracts and our customer service trump anyone else in the industry. 

We do not run credit or employment checks. The strength of your litigation solely dictates our advance terms and amounts. This means that if you have been denied loans before and need immediate cash now, those denials will not affect your ability to receive a settlement funding advance from us.

While all our contracts are custom-tailored to each plaintiff’s situation, you typically will have to pay back the original amount advanced to you plus interest rates at the time of settlement payment. So there is no risk to you.

Although your lawyer cannot give you an advance on your settlement, you can still borrow money from your lawsuit from Baker Street Funding. You have the option to take a custom rolling contract that gives you access to a fixed amount of cash each month, or you can re-apply for a second lawsuit loan if you run out of cash. This way, you can rest assure that your financial obligations will be met.

Using your lawsuit money intelligently is key to getting through your financial difficulties until your lawsuit settles.

See some of our settlement funding products.

Learn more about pre-settlement funding →

Select a funding service to apply. 

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Lawsuit Loans

Litigation Funding

Personal Injury Loans

Settled Case Loans

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Or just call us at 888.711.3599 to apply.