When it comes to money, a loan is not what is preferred for most Americans unless a specific emergency arrives. However, loans can come in very handy when you are out of cash due to a personal injury.
Most Americans are not aware that a specific type of litigation financing exists, such as getting a loan from your lawsuit. Also known as pre-settlement legal funding, lawsuit loan, or a plaintiff settlement cash advance, this type of financing is non-recourse, and it is based on the future winnings of a legal case. There are no credit checks, no monthly payments, and the money is to be paid after you win your case.
The lack of understanding and knowledge about plaintiff funding (or pre-settlement funding) creates a question of whether lawsuit loans are safe, how to find the best lawsuit loan company, and if they are worth it.
Here’s the scoop on pre-settlement funding for plaintiffs.
What is pre-settlement funding?
To better understand when to take out a loan against your lawsuit, it may be essential to know first what a lawsuit loan is.
Pre-settlement funding or a lawsuit loan is a form of loaned risk-free money against a future settlement or court award. It’s as simple as that.
Personal injury plaintiffs are the primary borrowers of pre-settlement funding companies, in addition to victims of discrimination lawsuits and false imprisonment cases.
Pre-settlement funding can become a great financial tool for those who are injured and need an immediate cash advance. They are an advantage for those in dire need of money to keep the lawsuit process going until the legal claim is satisfied and settles for the dollar amount you deserve and not a lowball offer.
Lawsuit loans help plaintiffs take off a substantial financial setback on their backs as long as they are used responsibly.
How does pre-settlement funding work?
Pre-settlement funding does not require much rocket science. A plaintiff becomes eligible for the funds as soon as they file a lawsuit and retains an attorney; only then will the company accept the application.
All legal funding companies evaluate cases based on how solid the litigation is. The attorney in charge of the case must also be cooperative.
The approval process typically takes 1 – 2 business days.
The legal funding company proceeds to lend the plaintiff a contract specifying a certain amount of money equal to 10% (or less) of the value of the case. For settled cases, the approval amount goes up to 20%.
The same concept goes with attorney funding for post-settlements and pre-litigation. Learn more about attorney funding here.
Paying back the legal advance
The payment of the lawsuit cash advance occurs once the settlement check arrives, not when the lawsuit is active.
Every plaintiff accessing a pending lawsuit loan is inclined to pay the money back with the addition of interest rates and sometimes fees. The attorney at hand would go ahead and pay back the funds as stated in the contract.