Oftentimes, personal injury victims find themselves in precarious financial situations. Thousands of plaintiffs struggle daily to pay their daily expenses and bills and make ends meet or keep a roof over their family’s head and keep them fed. When you are injured and unable to work, there may be no money coming into your pocket while you wait for your case to work its way through the legal system and either settle or go to trial.
A settlement loan is a type of non-recourse financing that can help you pay your bills and other expenses while you are waiting for your case to be resolved. Here, we will explain how settlement loans work, so you are prepared before taking on this type of financing.
How do settlement loans work?
Settlement loans allow plaintiffs to get money without providing a credit score or employment status. You only repay the funds once your lawsuit is resolved in your favor, whether through a settlement or a jury verdict.
Once your case resolves to your advantage and the compensation is disbursed, your attorney will be the one repaying the settlement loan to the company. The lender will recover the agreed-upon amount directly from your attorney only when the money hits their account. If your case does not result in a monetary compensation, you do not have to pay back the loan you obtained pre-settlement, and your assets will not be touched.
How to apply for a settlement loan.
To apply for a settlement loan, you will need to provide basic information about your litigation as well as your attorney’s contact information. The underwriting process fairly takes 24 – 48 hours, subject to your attorney’s full collaboration. The funding company will contact your attorney to learn more about the merits of your case, and they will also have their own attorneys review your legal case to see if it is the right fit and determine whether your request will be approved. Most funding decisions are typically made the same day your lawyer sends the required lawsuit documentation.
It is important to understand that you can only get a settlement advance subject to your attorney’s participation in the funding process. Without your attorney’s consent or signature, you cannot get a settlement loan.
If your request is approved, you and your attorney will receive a contract with an agreed amount that your attorney will be responsible for paying back when you win your case. Not every case is approved for a pre-settlement loan. Lenders are only interested in funding cases in which they stand to be paid back. That’s why attorneys review your legal claim before they make you a funding offer.
What is the interest rate on a settlement loan?
Depending on the funding provider you choose, you’ll have either a fixed or compounding interest rate. Your interest rate will impact the total cost of your loan and your final settlement.
That said, each funding company has its own policies; ensure to ask what the requirements are, and if they provide additional funding in the event you need extra money in the future. Some settlement loan companies only charge a one-time fee but won’t provide you additional money if you need it later on. If they do, they will charge that one-time fee again, and receiving additional loans with them could potentially get you into paying 100% a year in fees alone.
With Baker Street Funding, you get a low-interest pre-settlement loan with additional protection for the period between when you receive the money, and your case eventually resolves.
Our interest rates vary from 2.95% to 3.4% monthly, non-compounding, depending on the risks of your case. We also provide protection if your litigation takes longer than 3 years to conclude. This means all your interest charges stop in the second or third year from when you took out your last loan.
Uses of pre-settlement loans.
The settlement loan money can be used for any purpose except paying your lawyer’s fees. This is why funding companies require all borrowers to have hired an attorney under a contingency fee agreement. You can use the loan for living expenses and pay your rent or mortgage while waiting for your case to conclude. Most plaintiffs use their advances to pay medical bills and family expenses until the insurance company gives them a better offer. Other people use it for things such as food and transportation to help them cope with their daily lives while their attorney works on settling for a fair case value.
The takeaway
A settlement loan is one way to tide you over during the time you are waiting for your lawsuit to successfully conclude. Along with the fact that settlement loans can be used for most types of expenses, they do not have any strings attached if things do not go your way and you do not make a recovery. In that case, you would not be responsible for repayment.
Baker Street Funding provides low, fixed interest rates and caps. Checking if you qualify for a cash advance on your pending lawsuit can take only a few minutes. With lower rates than other funders, Baker Street Funding may be the right choice for you.
Learn more about Baker Street Funding rates and check out our lawsuit loan calculator while you are at it.
