A good percentage of claims filed in court involves compensation to the plaintiff. These are mainly cases where the plaintiff is filing a claim for cases such as personal injury, fraud, antitrust, and/or wrongful death. Claims generally allow the plaintiff to receive an amount of money to pay for damages such as medical expenses, loss of income, emotional stress, and other such factors that require compensation. Although there is no set period of time during which a lawsuit will be completed, the plaintiff could be looking at several months to a few years before being awarded a settlement. During this period, there are costs that a plaintiff must pay for, including day-to-day expenses.
A common worry among individuals involved in lawsuits is money. It is possible that someone who has filed a claim to a settlement may have lost his income or may require medical treatment or may not be able to work for extended periods of time. While waiting for the conclusion of the case, it is important to have some sort of resource to fall back on for necessary expenses. A possible option is borrowing against the lawsuit or, specifically, the settlement from the lawsuit.
While this might seem counter-productive to the case, the truth is, not many people who have filed for settlement claims have the means to support themselves during the trial. This is especially true among individuals who have lost their jobs or have become physically or emotionally incapable of working and earning an income.
The period during which a plaintiff is struggling financially and mentally can be the most vulnerable time. He/She may be pressured to give in to an agreement that is beneficial only to the defendant. In many cases, a plaintiff may be tempted to agree to settle at an amount that is lower than what he/she would have received had the case gone to trial. Borrowing money against a lawsuit could help buy the plaintiff time and give him/her the opportunity to fight for what is just and fair compensation.
Can I Borrow Money Against My Lawsuit?
There are certain types of lawsuits that allow the plaintiff to borrow money from the future settlement. These lawsuits are those that have legitimate claims for settlement in case of a successful case. The money that can be borrowed from these lawsuits is called a pre-settlement loan or funding or a lawsuit advance. Pre-settlement funding is a type of loan that a plaintiff can take out against the cost of the settlement before the case is concluded. The funds can be used to pay for the myriad of expenses that accompany the legal process. It provides a solution to a person who is experiencing some financial issues, either as a direct or indirect result of the lawsuit.
How Does Pre-Settlement Funding Work?
Pre-settlement funding or loan, as its name implies, is a loan taken against the expected settlement amount of the case. The funds are given to the plaintiff and will be paid back after the settlement is disbursed. In short, it is a loan against the amount of the settlement or judgment claim. After the successful conclusion of the case wherein the plaintiff has been awarded the amount of the settlement, he/she will then pay back the principal amount of the loan plus interests.
Pre-settlement loans are offered by third-party companies who specialize in these types of loans. Note that not all types of cases that go to trial may qualify for pre-settlement funding. The fund is only granted to plaintiffs whose cases are more likely to win. The point of a pre-settlement lawsuit funding is to provide the plaintiff with money to support their financial needs while the trial is ongoing or while the settlement has yet to be disbursed.
Who is Qualified to Borrow Against a Lawsuit?
Depending on the company that provides pre-settlement loans, there are certain requirements that must be met before the funding is provided.
- Claimant or plaintiff must have a reasonable claim to the case; that is, he/she must have suffered directly or indirectly from the action/s, inaction/s, or products of the defendant, be it a private individual or individuals, or a business entity. Whatever the injury or damage be, it must be provable.
- The defendant must be capable of paying the claims to the plaintiff. This may or may not involve the defendant\’s insurance company.
- The plaintiff’s lawyer must have given his/her consent to taking out a pre-settlement loan.
- Pre-settlement funds are only available to plaintiffs or those who are filing the case to make a claim.
What Types of Cases are Qualified for Pre-Settlement Funding?
Again, this will depend on the pre-settlement company that will approve an application for funding. However, the majority of the cases that are considered eligible include:
- Slip & fall injuries
- Motor vehicle accidents
- Medical malpractice
- Wrongful death
- Product liability
- Pharmaceutical issues
- Construction accidents
- Premises liability
- Wrongful termination
- Commercial litigation
What Happens After I Win the Case?
The settlement amount is usually paid through the plaintiff’s lawyer. After the plaintiff has won the case and the payment is received, it is the lawyer\’s responsibility to ensure that the pre-settlement funding company is reimbursed the entire amount of the loan plus interest. The remaining balance is then given to the plaintiff.
So What Happens If I Lose the Case?
Most companies that offer pre-settlement loans will not charge the client if he/she loses the case. This is the reason why these companies have to review and assess every loan application. Since the company will take on the risks of granting the loan, they will lose if the client loses. Ultimately, the client still receives the financial help they need.
How Can I Begin the Process of Acquiring a Pre-Settlement Loan?
First, it is important to speak to your attorney. He/She will be able to provide you the best advice regarding your case and even give you a list of other options you can turn to if necessary. Your lawyer will also be able to determine the best chances of your case and whether or not borrowing money against your lawsuit is beneficial to you. Once you have obtained your lawyer\’s approval, look for the pre-settlement funding company that offers the best service for your case. You may have to compare different companies and do your research to ensure that you have a thorough understanding of the intricacies of borrowing money against your lawsuit. Once you have chosen the company, you can talk to their representative and inquire about their services. At this point, it is important to read and understand the company’s terms and conditions to avoid any confusion later.
After your application is received, the funding company will review your case by getting in touch with your lawyer. This will help give them a clearer picture of your claims. If you meet their eligibility criteria, they will then approve your application and provide you with the funds you need. As with any important decision you make, always know the benefits and downsides of borrowing money against your lawsuit. Learn to weigh the benefits against the disadvantages and ask for advice from a legal professional so you can make an informed decision where it matters.