Personal injury lawsuits (and commercial disputes) can often put plaintiffs in a tight financial spot. Whether you lost your job and need to pay for medical bills, have a commercial litigation claim that’s draining you, or need to pay rent, your pending lawsuit can still take too long to resolve those current financial concerns.
If you’ve spent some time researching how to borrow money from your upcoming settlement or jury verdict, it’s important first to understand the type of loan you are contemplating, what your obligations are, and what can happen if you lose your legal case.
Let’s dive further into what non-recourse legal funding is, the application process, and how you can get one.
What is Non-Recourse Legal Funding?
First, let’s explain what recourse loans are. Traditional financial institutions typically provide recourse loans, which are secured by collateral. That means that if you fail to repay the loan, the lender has the right to take possession of valuable assets such as your home, car, or bank accounts. In fact, recourse loans allow financial institutions to seize your assets to recover their losses.
In contrast, legal funding, also known as litigation financing or pre-settlement funding, is a non-recourse type of financing. As the name implies, non-recourse funding doesn’t require you to pledge any of your assets as security for the loan, as there is no repayment if you lose your case. There are also no credit checks or income verifications, making it an option for a broader range of individuals, including those with poor credit histories.
With non-recourse financing, a legal funding company uses your pending lawsuit settlement as collateral. They can’t make you repay the advance until you receive your compensation.
Why Use Non-Recourse Funding?
Non-recourse legal funding offers a unique financial safety net for plaintiffs during the often lengthy litigation process. It gives you the financial support and stability you need now without the pressure of repayment hanging over your head if your case doesn’t settle in your favor. This unique benefit removes the financial risk typically associated with borrowing.
Moreover, non-recourse legal funding can significantly enhance a plaintiff’s bargaining power. Think about how much stronger your case could be if financial stress were off the table. When you’re not in desperate need of cash, you’re less likely to settle for a lower offer just to get quick money. Instead, you and your attorney can concentrate on building a stronger case. This might mean hiring expert witnesses or conducting additional investigations.
Having this financial cushion can help you hold out for a fairer settlement, and increase your overall compensation.
Another remarkable benefit is the simplicity of the application process. Most funding companies don’t require credit scores or detailed financial histories. This ease of access quickly provides funds to cover medical expenses, living costs, and other critical needs without sacrificing your long-term financial health—often within a day or two.
The downside, of course, is that non-recourse financing doesn’t favor the pre-settlement funding company. Lenders can’t collect repayment of the money you borrow other than a successful conclusion of the case, which is what secures the loan. That’s why interest rates are higher than traditional recourse loans. Higher rates justify the high risk to the lender if the loan defaults.
Steps of the Process
The application process for a non-recourse pre-settlement loan might seem more complicated than it actually is. Yes, you have to know a few things about your case and make sure your attorney cooperates with the lender. But it really shouldn’t take long to get the facts of your legal claim straight after applying. That’s why it’s worth first considering the reputation of the funding company before you apply.
Researching its history and reading client reviews can give you confidence in your choice. A reputable company will offer fair terms and reliable service, which makes the whole process smoother and more transparent. Once you’ve found the right lender, follow the next steps.
Figure out how much you really need to take out
When you’ve suffered an accident or a personal injury and are struggling to cover your expenses, legal funding might be the right fit for you.
However, prioritize your urgent financial needs, and understand that pre-settlement loans come with costs and loan limitations. Borrowing more than you need means you’ll have more interest and fees to repay once your case settles. These costs will be deducted from your final settlement, overall, reducing the amount you actually receive.
Think of it this way: the more money you take out now, the less you’ll have later. If you’re not careful, you might end up with a much smaller portion of your settlement than you anticipated.
Moreover, borrowing responsibly also prevents future financial strain when emergencies arise while your case is active. Legal funding typically provides up to 10% of the projected future settlement. Requesting more than this percentage will result in the denial of additional funding later on. This could leave you in a difficult financial position, especially if your case takes longer to settle than expected.
At the end of the day, the goal is to balance your current needs with long-term financial health. If those needs change overtime or the initial amount isn’t enough, you can always apply for additional lawsuit funding.
Ask your attorney to cooperate with the funding company
Your attorney’s cooperation might be one of the main factors that pre-settlement funding companies require when considering you for a non-recourse pre-settlement loan. Your lawyer negotiates the loan amount on your behalf, and provides the lender with a realistic perspective of where your case stands. Once your case settles, he or she will handle the repayment from your settlement.
Remember, your attorney is your trusted advocate, equipped with the knowledge and experience to bring your case towards a successful resolution. His or her presence in the legal funding process not only brings transparency but also safeguards you from any unfair lending practices.
Submit your funding application
Start by filling out an online form or making a phone call to the legal funding company. This initial contact provides basic information about your case and financial needs. If your case gets accepted, the lender will contact your attorney to request your case file.
Importantly, your attorney will need to provide these essential case documents as they are required. These might include medical records, legal filings, and other evidence related to your case. These documents help the funding company’s underwriters examine the merits of your case, the likelihood of a successful outcome, and the estimated value of your potential settlement. Without your attorney’s cooperation, the process cannot move forward.
If your application is approved, the funding company will present you with an offer for up to 10% of what your claim is worth. This offer details the amount of funding you can receive and the terms of the agreement. If you agree to the terms, both you and your attorney will need to sign the lawsuit funding agreement.
The money can be sent directly to your bank account or via check, depending on your preference and the lender.
Need Financial Help Now? Apply for Non-Recourse Legal Funding Today
Understanding non-recourse legal funding can be a game-changer when you’re facing financial difficulties due to a lawsuit. This type of non-recourse funding offers immediate relief by allowing you to borrow against your potential settlement without the burden of repayment if you lose your case. It also empowers you to pursue justice on your own terms.
However, it’s important to borrow wisely to avoid high interest and fees eating into your final compensation. If your situation changes, additional funding options may be available.
If you’re a plaintiff waiting for your case to make it through the courts and are looking for the right legal funding company, consider Baker Street Funding. Qualifying personal injury cases may be eligible for up to $2,000,000, and commercial litigation disputes up to $20,000,000 or more, depending on the merits and the type of claim.
The application process is straightforward and can be completed entirely online. Baker Street Funding prides itself on transparency, with no hidden fees or markups. Interest rates are capped and fixed, so you don’t have to worry about your loan accruing over time. Plus, if you unexpectedly lose your case, you won’t owe any money back.
Baker Street Funding keeps your legal and financial status confidential. There are no invasive credit checks or income verifications, and disclosure of the funding to the defense is only required if mandated by court.
To see if you qualify for pre-settlement funding, you can apply and speak to someone in just a few minutes. You may also pre-qualify for settled case funding if you are waiting for your settlement check. Baker Street Funding offers non-recourse loans quicker than any other pre-settlement funding company. See if you qualify for a non-recourse cash advance today.
