While it is natural that you would think that settlement loans are loans, this actually isn’t the case. When you need a cash advance against a pending lawsuit settlement, litigation funding companies provide this money, if your lawsuit meets the criteria. Many people get these types of advances when involved in a personal injury lawsuit and awaiting settlement, which often takes months or longer. In the meantime, they find that paying the additional medical costs associated with their injuries along with the rest of the household bills becomes a financial burden they can hardly bear. Settlement loans are designed to relieve this stress, and help you live comfortably while waiting for your case to settle.
Litigation financing is a process in which your attorney submits the details regarding your lawsuit to the funding company, who then reviews it to ensure you have a strong case. Most frivolous lawsuits are not accepted, but when you have been injured in a car accident that was the fault of someone else, settlement loans are typically approved. The funding company will review the application usually the same day it is submitted by your attorney; if approved you can expect an advance against your pending settlement with 24 hours.
Unlike other types of loans, settlement loans are non-recourse, meaning that in the event you do not win your lawsuit you owe nothing to the funding company. You pay nothing upfront, and there are no credit checks, employment verification or risks to you. The amount you qualify for will depend upon your expected settlement amount. Typically, litigation funding companies lend approximately 10% of the amount you expect to be compensated, so if your settlement is worth $75,000 you may expect an advance in the area of $7,500.
How do you repay the money? This is another aspect of settlement loans that most people find advantageous. There are no monthly payments to make; you simply repay the litigation funding company once you have received your settlement. This way you are never forced to pay even more out of your bank account, which is the reason you needed a loan to start with. The money you receive may be used for medical expenses, attorney fees, household bills, groceries and other costs.
You’ve been injured because of the negligence of another party, and now you may be unable to work and facing huge medical bills. The insurance company will do their best to under compensate you, but your attorney is fighting to get you every dime you deserve. In the meantime, settlement loans help you pay the bills and avoid the financial anxiety that often comes with personal injury lawsuits. Discuss the pros and cons of litigation financing with your lawyer today.