Pre-settlement loans are loans given to plaintiffs of a lawsuit pending settlement. The loans are an advance of a percentage of the expected settlement after the case is settled. Lawsuits can be quite expensive.
Even with a large settlement amount, personal injury claims take long and may take a lot of time as the lawyer works to build your case. The financial burden may become too much. Pre-settlement loans alienate that problem by giving you a percentage or even the full amount of your settlement.
What Is a Pre-settlement Loan?
Pre-settlement loans are a great solution to cash flow problems in the middle of a lawsuit. Pre-settlement loans are also known as litigation financing, lawsuit loans, or pre-settlement funding.
Pre-settlement loans are quite different from traditional loans. These lawsuit loans are a type of advance. The funding company provides you with a cash advance on your expected settlement, while the case is pending.
Cases that are commonly eligible for a lawsuit loan include the following:
How Does a Pre-settlement Loan Work?
You can only apply for a lawsuit loan after filing an eligible lawsuit. After filing the lawsuit, the lawsuit loan company will evaluate your case’s merit then weigh your chances of winning or receiving a settlement. Finally, the company estimates the worth of your expected compensation, and offers you an advance based on all of the information.
Pre-settlement companies are business-oriented; therefore, they profit through interest rates that you pay from the settlement you finally receive.
For a typical pre-settlement loan, you won’t need to make any payments until you have had your judgment and case settled. Some expenses generally demand immediate payment of your claim; for instance attorney fees, and other litigation expenses are covered first; then, the pre-settlement loan company is paid from the remainder.
Why Get a Pre-settlement Loan?
If you were in an accident or sick from medical malpractice, your ability to still work might probably reduce or diminish altogether. In cases of wrongful death, the deceased may have been the breadwinner. As a result, you may have fallen behind with all your bills. A pre-settlement loan gives you an advance on the cash needed to cover your bills and living expenses before passing the judgment and the case settled.
The loan comes in handy to cater to mortgages, rent, medical bills, car payments, and even groceries. The advance is for you to make use of as you wish.
What if I Lose the Case?
The risk of loss is part of the business in pre-settlement loan companies. The lenders typically can’t recoup the amount they pre-funded you unless you have won your case. However, this fact depends on the agreement you make with the company, so be keen on the details and read your contract agreement thoroughly before signing it.
In a typical agreement, if your settlement ends up being less than the amount you had agreed to repay, the lender still can’t demand the difference from you. A lending company can only claim the settlement proceeds that remain after all other prioritized costs are paid, i.e., the court and attorney costs.
Benefits of Getting a Pre-settlement Loan
Pre-settlement loans have their distinct benefits that include:
- You are able to make ends meet. Keeping up with the costs of necessary bills may take a lot from you while handling a lawsuit. A lawsuit loan saves you from this hassle.
- You don’t require a good credit score to qualify for the loan. Pre-settlement loan companies are less likely to give much attention to your credit score when checking your application; they may not even run a credit check. The most significant determinant to whether you are eligible for the loan is your case’s likelihood of winning. The company focuses not only on the chance of winning but also on the probability of the case resulting in a large enough settlement to give the company a proper return on the investment.
- The loans are processed quickly. If you choose a good pre-settlement funding company, your loan could be approved within hours or at most a few days.
Apply for a Pre-Settlement Loan
When waiting to get a settlement from a lawsuit, you’ll need money to cover all the essential expenses; this is when pre-settlement loans come in handy. The most significant advantage with such loans is that they are not a credit you need to pay; they are more of an advance.
Court cases can be lengthy and frustrating, even when knowing your chances of winning are high. The challenge is even more severe if you’re dealing with personal injury suits where you are ailing and out of work. If you are in such a circumstance, know that lawsuit loans are a great option for you.