Can You Get Cash for a Lawsuit Settlement in Advance? Lawsuit Loans Explained

Today, an overwhelming 98% of cases are settled before trial. And, often, it just makes sense to avoid court. After all, a lengthy and demanding case can take a toll on your mental wellbeing, as well as on your everyday life, career, and financial situation.

Nonetheless, money matters shouldn’t stand in the way of your pursuit of justice - and a lack of funds shouldn’t be the reason why you give in and settle for unsatisfying compensation.

Luckily, bespoke loans can help you survive your lawsuit financially and navigate the months ahead with peace of mind. Here’s all you need to know about pre-settlement loans before applying for one.

What is a Lawsuit Loan?

Civil and criminal law cases vary in length but, generally, it takes between six and 18 months to reach a settlement - and in some cases, this timeline can stretch to 2-3 years! It isn’t a secret that lawsuits are lengthy and can drag on for a considerable amount of time.

But what often surprises plaintiffs is how much the process can wear them down from both an emotional and financial viewpoint. In turn, this kind of pressure can lead to settling for low proceeds and compensation.

In this case, cash advances such as pre-settlement loans can help you afford your living expenses while awaiting settlement, and avoid yielding to the growing financial pressure.

But what are lawsuit loans? As seen with the lawsuit loans on SFGATE, they are described as “a financial tool that provides you with the cash you need before your personal injury claim settles.”

This means that once approved, a lawsuit loan can help you cover your living expenses, like rent, during a personal injury and keep the lawsuit going until you are awarded adequate monetary compensation.

How Do Lawsuit Loans Work?

While specifically-designed cash advances for a lawsuit settlement are often referred to as “lawsuit loans,” they work differently from traditional loans like mortgages and auto loans.

Standard loans are commonly offered by lending institutions, their eligibility will depend on an applicant’s credit history, and they are repaid over time through regular payments.

Oppositely, lawsuit loans are a cash advance against a future settlement. More specifically, these are non-recourse purchases made by a lender to own a percentage of your legal claim equity. Unlike standard loans, they only need to be repaid if you win your case and obtain monetary settlement.

Who Is Eligible for a Lawsuit Loan?

The eligibility criteria and application process for lawsuit loans are different from the ones of a traditional loan. Firstly, they are not provided by standard institutions and banks, but by cash advance companies.

Additionally, there are no credit checks involved with the application process, and your case will be assessed based on criteria such as:

• Age - you will need to be 18 or older to apply

• Case type - lawsuit loans are specifically designed to help those involved in a personal injury case

• Liability - or what party is at fault

• Extent of damage - including injuries, economic impacts, and psychological damages

Keep in mind that most cash advance companies will approve a lawsuit loan only for claims against insurance companies, and they will review your insurance coverage before offering you an amount to borrow.

How Are Lawsuit Loans Repaid?

Unlike traditional loans, lawsuit loans don’t always need to be repaid. Since they are “non-recourse” - or no win, no pay - purchases, you will only need to repay your loan if your case is successful and you receive your desired settlement.

The Benefits and Drawbacks of Pre-Settlement Loans

As a plaintiff in the middle of a lawsuit, running out of funds can put you under extreme pressure, push you towards speeding up your case, and even cause you to settle for low proceeds.

Pre-settlement loans can help you loosen this financial bind and afford your living expenses, such as rent and groceries. Additionally, lawsuit loans can help you cover injury-related expenses, loss of work, and associated legal fees.

But ultimately, the greatest benefit of pre-settlement loans is that it allows you to make a clear, informed decision to pursue the settlement you deserve, without facing financial pressures. In turn, this can help you fully recover financially and start working towards stability.

On the other hand, it is important to choose your cash advance company wisely to avoid overwhelming repayment costs.

Today, the costs associated with a lawsuit loan are becoming more accessible. But, lawsuit loan interest rates can be as high as 27-60% per year and are compounded monthly. This means that, if your lawsuit lasts a year or longer, you might have to pay back over double the amount you borrowed!

Finding a Reputable Lawsuit Loan Company

While there are unreputable cash advance companies that charge over 100% in interest rates per year, some lenders are both honest and helpful.

All you need to do is choose your lender wisely, read all the terms and conditions of your agreement, and set clear expectations about what you’ll need to pay back. After all, don’t forget that they’ll be taking on a huge risk when lending you money!

This article does not necessarily reflect the opinions of the editors or management of EconoTimes