How Do Lawsuit Loans Work?

Here is how lawsuit funding works.

If you are under financial pressure and need to borrow money from your lawsuit, learn how lawsuit loans work. Pre-settlement lawsuit funding lets you borrow money from your pending settlement today in exchange of a portion of your future compensation. Lawsuit loans are a great way to get money to pay your bills and living expenses and they are relatively easy to apply. The approval is based on the strength of your case and your attorney’s consent. A cash advance on a pending lawsuit can be a lifesaver to plaintiffs in need of immediate cash. Apply for legal funding cash today.

Lawsuit funding

What is lawsuit funding?

Lawsuit funding is a non-recourse cash advance against the potential proceeds of your settlement payment or award of damages. This cash advance comes in the form of a check or a wire and is provided to qualified personal injury victims. Essentially, lawsuit funding is a ‘no-win no-pay’ investment into litigation; therefore, it has no risk.

A risk-free cash advance.

Lawsuit funding is a risk-free advance because the money is not backed by recourse (such as your home). To have a loan backed by recourse means that a financial institution has the right to take legal action against you if you default on the payment. On the other hand, non-recourse funding is not backed by recourses and tends to have higher interest rates (depending on the settlement funding company) than traditional loans. The good news is that lawsuit funders view your expected settlement proceeds as collateral. While this varies by agreement, all legal funding is risk-free. This means that if your case does not settle or you lose, you are under no obligation to pay the money back. You walk with the money.

Lawsuit funding is risk-free because the loan is not backed by recourse (such as your home). To have a loan backed by recourse means that a financial institution has the right to take legal action against you if you default on the payment. On the other hand, non-recourse funding is not backed by recourses and tends to have higher interest rates (depending on the settlement funding company) than traditional loans. The good news is that lawsuit funders view your expected settlement proceeds as collateral. While this varies by agreement, all legal funding is risk-free. This means that if your case does not settle or you lose, you are under no obligation to pay the money back. You walk with the money.

100%

risk-free.

only pay

if you win your case.

How do lawsuit loans work?

The way lawsuit funding works is by evaluating your case merits and estimating the value of your pending lawsuit. Pre-settlement lawsuit funding companies base the loan amounts on how much you request, the risks of your case, and the approximate settlement amount you may receive.

Disclaimer: Funding companies use certain requirements before approving a loan. The case must be solid and have a high probability of winning it. The lawsuit loan interest rate can go from 2% a month to 3.4% a month non-compounding. For settled lawsuits, a minimum settlement of $50,000 is required for funding. Your attorney must agree to help you get funding. Without your attorney’s consent, you cannot get pre-settlement funding.

Pros and cons of pre-settlement lawsuit loans.

Pros

  • Accident lawsuits can be expensive, stressful, and time-consuming. Injuries from a car accident or any other personal injury can leave you financially crippled. Lawsuit advances help plaintiffs cover living expenses. They are an excellent option to get quick access to lawsuit cash.
  • Good credit or job history are not requirements for the advance. A settlement advance is based solely on the strength of your case.
  • Funds are released in as little as 2 hours from approval.
  • You can get advances from $1,500 up to $750,000 depending on the strength of your claim.

Cons

While, in theory, legal funding sounds like an amazing financial product, there are things to be aware of:

  • Most lawsuit advance funding comes with high interest rates. Most lawsuit loan companies charge higher interest to make up for the risk of investing in your case. Please make sure the rate they show you on the contract is the rate they promise.
  • Most lawsuits take a very long time to settle, and rates can pile up quickly over a year or two. You should make sure that you are aware of the interest rate, if it compounds, and if they offer a rate cap. A rate cap means that your loan will end in a certain amount of time and you should not pay any more interest after that time even if your case settles in 5 years. Without a rate cap, your interest rate can maximize the repayment amount over time. 
  • Baker Street Funding offers simple interest rates ending in the third year. Contact us toll-free today.

See our legal funding products.

Learn more about pre-settlement funding →

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