Lawsuits can help victims receive compensation for pain and suffering caused by negligent acts. But cases can drag on for years, making it difficult for plaintiffs to survive financially until they receive their settlement. That’s where lawsuit loans can help.
Lawsuit loans are a unique brand of financing that can be a lifesaver for plaintiffs struggling to maintain their finances. They provide a cash advance on expected future court settlements, which can help you meet your immediate financial needs. Most lawsuit loans are used to pay medical expenses for those without health insurance. But the funds can be spent on anything, including mortgage payments, car notes, and everyday living expenses.
Interestingly, there are no loans actually involved with lawsuit loans. That’s because they are technically a “non-recourse” form of payment. Repayment of lawsuit loans is not due until after your case has been settled. In fact, many attorneys add the cost of this financing to the basic reimbursable costs of the lawsuit when determining damages.
If you do not win your case, you do not have to repay the funds advanced. Neither his lawyer nor anyone else. So essentially, the companies that make lawsuit loans bear all the risk, not you.
Qualifying for Demand Loans
While personal injury cases are the most common litigation used with lawsuit loans, many types of cases qualify for this type of financing. They include medical and legal malpractice, wrongful death, wrongful termination, breach of contract, sexual harassment, employment discrimination, and product liability.
In terms of personal qualifications for demand loans, there are none. Because no actual loans are made, standard loan approval items such as a credit check and employment verification are not required. Instead, companies that offer lawsuit loans base their selection on the merits of the cases they choose. Your goal is to support strong cases with the highest probability of winning.
For these companies, demand loans are purely an investment tool. If you lose your case, you walk away with nothing. But if you win, they will have the legal right to share your agreement. This right is based on the bond that is placed in your case to secure your demand loan. The lien gives the finance company a legal right to be reimbursed when your case is settled.
Given the high risk involved, the companies that finance judicial credits charge a significantly high commission for the services they provide. Your fee can be up to 15 percent of the settlement amount. This may seem like a hefty percentage. But if your case wins, you will likely walk away with more money than you would if you settled early, even after paying off the lawsuit loan.
Exactly how much money can be provided for lawsuit loans? The actual amount depends on the finance company’s underwriting requirements. However, most companies that finance lawsuit loans will pay up to $500,000.
Why Demand Loans?
Lawsuit loans can be a viable option for plaintiffs who are struggling to make ends meet until their case is resolved. Many of them lack access to external funding and are desperately trying to survive. Your family may not be able or willing to lend you cash to bail you out. They could get money from your home equity line or loan, but this could put your home in jeopardy. And they may not qualify for traditional bank financing because they lost their jobs due to their injury or other circumstances.
However, lawsuit loans can make a big difference in your case and in their lives. Here’s how: People who sue for personal injury and other cases often find themselves at a disadvantage in the legal system. Firms with deep pockets can afford to extend cases in an effort to “wait” for plaintiffs who are in dire need of funds to cover their living expenses.
As a result, litigants often give in to the pressure of their financial difficulties and opt to settle early for far less than they deserve. Demand loans help fill the gap. They provide the financial means for plaintiffs to survive while they wait to receive their settlement.
Could a Lawsuit Loan Benefit You? You might be able to if you’re out of a job, having difficulty meeting basic needs, can’t qualify for a traditional loan, or are considering bankruptcy.
Demand Loan Companies
Most lawsuit loan providers are relatively easy and straightforward to work with. Normally there is no
up-front fees or out-of-pocket costs to apply for lawsuit loans. Here’s how the process works: You consult with a company that offers lawsuit loans regarding your case and requirements. The company will then contact your attorney, review the details of your case, and let you know if you qualify for financing. And once all the paperwork is completed and a lien has been placed on your case, the funds will be sent directly to you by check.
Lawsuit loan companies maintain a hands-off policy regarding the legal strategy of your case. They do not attempt to offer any legal advice, as their main focus is related to funding issues. Therefore, your attorneys will maintain full control over your case and any relevant legal matters.
Lawsuit loans can be a lifeline for litigants struggling to keep their finances afloat while their case is resolved.