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 you 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, 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 understanding what non-recourse legal funding is, the application process, and how you can get one.
What is non-recourse legal funding?
First off, let’s start by explaining what recourse loans are. Traditional financial institutions typically provide recourse loans which are secured by collateral. That means that a lender can seize an item of value (a home, a car, your bank accounts, or they can even trash your credit) in the event that you default on the loan. In fact, recourse loans allow financial institutions to take over your assets to recover for their loss.
On the other hand, legal funding is a non-recourse type of loan. As its name implies, non-recourse legal funding doesn’t require you to put any of your assets in exchange for the loan nor require credit scores.
With non-recourse financing, a legal funding company uses your pending lawsuit settlement as collateral, and they cannot force repayment of the advance until your settlement is paid out.
Why use non-recourse funding?
The main reason to use non-recourse legal funding is that it favors borrowers because they are not legally bound to repay the advance unless they win the case. Similarly, there are no monthly payments, no credit checks, or employment verifications.
Another potential benefit is that legal funding can help you settle your case for maximum value. When you have enough money to pay your bills, household costs, or any other urgent expenses, you can support yourself during the pendency of your case and reject minimum settlement figures from the insurance. Fundamentally, your attorney can get more evidence and fight for a fair final settlement offer without the financial pressure of settling early.
The downside, of course, is that non-recourse financing does not favor the legal funding company. They cannot collect repayment of the money you borrow other than a successful conclusion of the case, which is what secures the loan. This is why the interest rates are higher than 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 lawsuit straight before applying. Consider following these steps:
Figure out how much you really need to take out
When you have suffered an accident or a personal injury and cannot cope with paying your expenses, legal funding may be the right fit for you. Make sure you are realistic about how much money you need. If you borrow more money than what you actually need, you’ll be paying interest on the lump sum you don’t need. You can always come back and request additional lawsuit funding.
Ask your attorney to co-operate with the funding company
This might be one of the main factors that pre-settlement funding companies require when considering you for a non-recourse pre-settlement loan.
Since your attorney is your sworn advocate and has the understanding, experience, and education to bring your case to a successful conclusion, they must be present during the legal funding process. All legal funding companies require your attorney to consent to the loan and provide complete information about your lawsuit.
Submit your funding application
The final step is to submit your application. From this point on, the legal funding company will contact your attorney to request your case file, and according to that information, they’ll make a decision, usually within 24-48 hours.
At its core, the strength of your case will dictate how much money you could potentially get approved for, and your approval amount will be for up to 10% of what they think your claim is worth.
Once you and your attorney execute the lawsuit funding agreement, your loan payment will occur. Payment types differ from lender to lender, but most legal funding companies send you a check or directly deposit the money into your bank account.
Ready to get the financial assistance you need?
If you’re a plaintiff waiting for your case to make it through the courts of law and are on the hunt 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.
You can complete the legal funding application entirely online, and you’ll have access to talk to an expert 7 days a week. There are absolutely no hidden fees or markups when you get approved for lawsuit funding with Baker Street Funding.
Our interest rates are capped and fixed, so you don’t have to worry about your loan accruing overtime. If you unexpectedly lose your case, you will not be charged any money, and you won’t have to pay it back.
To see if you qualify for legal funding, you can apply and speak to someone in just a couple of minutes.
Do you have a settled case but haven’t been paid yet? You may pre-qualify for settled case funding by applying today.
Baker Street Legal Funding offers non-recourse loans quicker than any other legal funding company. See if you qualify for non-recourse cash today.