A lawsuit cash advance is commonly known as a lawsuit loan or pre-settlement funding. This type of financing refers to borrowing money from your future settlement or award and paying it back once you receive the award from your settlement or verdict.
Personal injury plaintiffs mainly use these advances to cover all necessary expenses during a pending claim. It helps them get through the here and now while waiting for the attorney representing them to resolve the claim.
Lawsuit cash advances can help you cover all those expenses that you can no longer pay for, as of your inability to work, which can be an unfortunate outcome due to your injuries.
To help you understand clearly, we outlined the myths and facts about pre-settlement legal funding.
Lawsuit funding disinformation # 1: A lawsuit loan is a real loan and has to be paid back
No matter what you call this type of financing, a lawsuit loan is not a traditional loan because it is a non-recourse type of financing. Don’t fall for predatory funding companies who lie about lawsuit settlement loans being actual loans.
When you receive a cash payout in advance of your case resolution, you are not tied to paying any money unless you win a settlement or award. Settlement lenders won’t check your credit or income since it is not required to do so.
The traditional loan concept ends with legal funding (or lawsuit loans) since a traditional loan stands on a guarantee of the money to be paid back. When you get a bank loan, you will typically pay it back every month, with an added interest that is no less than an additional burden on an already financially strained injured borrower. Then you must show proof you can pay back the money monthly and ensure you have good credit before getting considered for a bank loan.
However, the pre-settlement legal funding does not add to one’s personal debts or stress. You only pay it back once you win your case. Period. If you lose the litigation, there is no obligation to pay the advance back. The pre-settlement funding company takes on the loss.
Lawsuit funding disinformation # 2: Pre-settlement legal funding is illegal
This rumor is deliberately spread by the critics of litigation finance, such as insurance companies because there are no legality factors in such unconventional funding.
These companies are very powerful and are in the business of paying the least amount possible to victims. What’s the purpose of this? To dissuade people from seeking pre-settlement legal funding to have money to survive and not take a lowball offer.
Legal funding has also been slowly regulated at the state level in some jurisdictions.
According to the facts, no law is built against anyone seeking a financial solution that lets them through the rough times during their lawsuit.
Pre-settlement legal funding sometimes serves as an advantage to financially burdened plaintiffs when a reputable company funds their claims.
Lawsuit loan disinformation # 3: Obtaining pre-settlement funding is not easy
Another rumor about lawsuit cash advances is that it is hard to obtain. However, pre-settlement legal funding is easy to obtain as long as your case is strong enough to win and your attorney communicates with the lender. As noted above, there are no credit or income checks like traditional bank loans.
Furthermore, the approval of the advanced funds relies upon the facts of the lawsuit that the potential borrower’s lawyers provide.
In most cases, plaintiffs receive their funding within 24 hours of their consultation. But, while the process may be simple, you need to speak to your lawyer to ensure they will cooperate with the company. You cannot get pre-settlement legal funding without a lawyer or their consent.
Lawsuit loan myth # 4: Lawsuit advances interfere with the legal cases
Pre-settlement legal funding companies are forbidden on all terms to interfere with legal cases. Thus, lenders do not interfere with these claims due to the risks of losing their investment in the case.
As per the facts, the client might get strained to end the lawsuit early without receiving funding from their potential settlement. In contrast, with pre-settlement legal funding, plaintiffs can hold off a bit longer instead of getting a settlement offer much lower than what they actually deserve.
Lawsuit loan myth # 5: All settlement lenders are unethical
You might come across several unethical funding companies around, but you also can’t resist accepting the fact that there are helpful ones, too.
The most reputable legal funding companies provide non-compounding low-interest settlement loans with caps to protect you from predatory lending. Not all lenders are the same.
Lawsuit advance disinformation # 6: The case won’t qualify for pre-settlement funding
Most legal funding companies focus on automobile accident and personal injury cases, including slips and falls, premise liability, medical malpractice, and construction accidents.
However, many settlement loan companies will consider almost any case in which there are no liability concerns, where the damages are significant, and there is an insurance policy for the defendant big enough to warrant the advance.
Plaintiffs with high-value claims are typically approved fast.
Getting a lawsuit loan is far easier than a traditional loan, and as long as you fund your case with a legitimate company, you should be on your way to getting funding quickly.
Now that you understand some of the cheap misconceptions and disinformation about lawsuit funding, you can choose wisely on who to choose to finance your pending settlement or award.
Looking for legal funding? Check out Baker Street Funding lawsuit advances — Get low rates starting at 2.95% non-compounding monthly, capped in the third year of your non-recourse lawsuit loan.