If you lose your legal case, you do not have to pay back the funds you borrowed from a settlement loan company. This means that there won’t be any consequences for you. Only pay back the money if you win your case.
During a personal injury, you may have no income coming in the door, and you likely need money to pay your living expenses. Lawsuit loans, also known as pre-settlement funding or settlement advances, help fill this financial need, so you do not need to resort to high-priced loan alternatives that may leave you even deeper in a financial hole than you started. Lawsuit loans are intended to help you meet your living expenses during the period before your lawsuit resolves.
Lawsuit loans also have the advantage that they are non-recourse, meaning that if your lawsuit does not work out in your favor, then a funding company cannot attempt to take your house or your car like if you default on a mortgage. Instead, because the loan company extended financing to you in exchange for the right to a portion of the recovery from your lawsuit, there is a lien on those proceeds. But if the outcome of your case does not result in your favor, the settlement loan company cannot look to anything else for payment, and you can walk away without paying them back.
Ultimately, if you do not win your lawsuit, the funding company will take on the loss.
What Are Lawsuit Loans?
Lawsuit loans are a form of non-recourse financing. This means the lender that extends a lawsuit loan is taking an interest in your lawsuit itself versus taking an interest in your current or future income or your personal assets. If your lawsuit resolves in your favor, the lender receives its money back along with whatever interest and fees were agreed to as a part of the lender extending you the financing in the first place.
With a lawsuit loan, you do not sign any sort of personal guarantee or pledge your house, car, or bank accounts as collateral for the pre-settlement financing you obtain. This means your house will not be foreclosed on like if you default on a mortgage, nor will a tow truck show up in your driveway to repossess your car like if you fail to make the required payments on a car loan. You will not log onto your bank’s website to find all the money gone like certain bank loans permit a bank to do if you stop making your loan payments.
None of these things will happen if you cannot pay back a settlement loan because you lost your case. Instead, a settlement advance lender can only look to the resolution of your lawsuit to get repaid for the funds it provided—this is the only way to collect repayment from the proceeds of a successful case. This means if your lawsuit, you will not have to worry about owing money to your settlement lender.
How Do Settlement Loans Work?
When you apply for a lawsuit loan, the lending company assesses the strength of your case and determines the likelihood of a favorable settlement or judgment. If they believe your case has merit, they will advance you a portion of your anticipated settlement or judgment amount. This advance is provided to help you cover living expenses, medical bills, and other costs as you await the resolution of your case. Lawsuit loans are typically structured so that the lender receives a percentage on the principal you borrowed against the final settlement or judgment of your case rather than a fixed repayment amount.
If you lose your case, the non-recourse nature provision of the loan protects you from having to repay the borrowed amount.
There Are No Guarantees As To How Your Case Will Resolve
There is no guarantee, no matter how good a case you may have, that your lawsuit will end up resolving in your favor. There may be one rogue juror that does not like you for whatever reason and convinces the other jurors to punish you for that, which can cause you to lose the case or to win the case but receive far less than you had anticipated. There may be a break in your case that is good for the other side. Perhaps a late-discovered surveillance video shows the accident from a different angle that helps the other driver more than it helps your case, or your injuries were less severe than you and your attorney thought at first, which affects how much pain and suffering and future medical bills you can claim.
Simply put, lawsuits are unpredictable. One of the reasons most cases resolve before trial is there are no guarantees when the case goes to the jury. This often bites defendants and insurance companies on the rare occasions they choose to take a case to trial, but it can sometimes cut the other way as well, and a plaintiff who brings a case and chooses to take it to a jury may end up receiving less than he or she expected.
Apply for a Settlement Loan
Baker Street Funding has been in the business of making lawsuit loans for years and understands the risks involved with settlement advances. Although a lawsuit may seem to be a sure thing, anything can happen when the case goes to a jury. This is why we employ a rigorous screening process on the front end to ensure we fairly evaluate every potential borrower’s case.
Additionally, we guarantee a transparent pre-settlement funding process so that you can understand and feel secure in your loan decision. Our commitment to providing unbeatable rates means that selecting us as your legal funding partner guarantees the best interest rates available.
All our loans are non-recourse, meaning we cannot and will not come after a borrower whose case either does not resolve in his or her favor. If you need a lawsuit loan, contact Baker Street Funding today.