After a severe personal injury and a stretching lawsuit, it’s hard to meet basic and medical bills without additional financial support. But do you have to settle fast to get out of the financial predicament or get a loan from your lawyer or a 3rd party so you don’t have to settle the case. Though financial constraints may overwhelm you, letting the lawsuit get into the trial phase to get a decent settlement is vital. Applying for a lawsuit loan can keep you afloat until the personal injury lawsuit is resolved.
Let’s look at the benefits and drawbacks of a pre-settlement loan and how a lawyer can help you get the best lawsuit loan.
Qualifications for a Lawsuit Loan
Plaintiffs pursuing compensation for medical malpractice, personal injury, labor, or employment disputes qualify for lawsuit loans. However, each plaintiff must provide proof of legal representation before getting the loan. A lawyer is instrumental to your lawsuit and the prospective lender.
Why Choose a Lawsuit Loan?
Personal injury lawsuits take long before a resolution, especially when gathering sufficient evidence to support a claim. Even with adequate evidence, the defendant may refuse an amicable settlement and drag the case, hoping that you’ll give up and withdraw the case.
Defendants will want to stall the case because they know you’re injured and can’t work hence push you for an unfair settlement. Don’t give in to a lesser amount than what your case is worth. Applying for a lawsuit loan will sustain you while the lawyer fights for your full settlement.
Can You Apply for Additional Funding?
Some lawsuits take weeks or months, while others may drag for years due to several appeals on the judgment. Running out of money from your previous loan shouldn’t worry you for the remaining time. Approach the same lender and request another loan. You’ll get an additional loan that is between 10 to 20% of your settlement value.
Unlike other loans, lawsuit loan lenders don’t look into your financial records or your credit score. All they need is the assurance from your lawyer that your lawsuit will get a valuable settlement. Once you fill out the loan application form, they’ll transfer the funds to your account within a day.
What Happens When You Lose the Lawsuit
Before financing, lenders weigh the lawsuit’s strength and seek a second opinion from another lawyer who assesses the case and determines its chances of success. Once the lender is confident of your win, they grant you the lawsuit loan and await your settlement day.
But what happens when the court dismisses your lawsuit? If the court awards no compensation, your lender should not demand repayment. Also, if your settlement is lower than the lawsuit loan amount, you cannot repay a higher amount than your settlement. The lawsuit acts as a guarantor, and when it fails, you are not held liable.
How to Repay the Lawsuit Loan
Unlike traditional loans, where people have to make monthly installments, lawsuit loans are paid once the final settlement is made. You don’t have to worry about penalties, increased interest rates, or what to do if the settlement is lower than your expectations.
After a court award or settlement, your lawyer will take you through all the legal expenses and loans that need paying before you get overexcited with the money. The lawyers settle the lawsuit loan, take their cut, and leave the rest of the settlement money to you.
Benefits of Applying for a Lawsuit Loan
Here are significant benefits of acquiring lawsuit cash advancement.
Keeps You Afloat
With injuries and looming legal fees, catering for different bills while not working is cumbersome. A lawsuit loan enables you to cater for essential bills and keeps you afloat for the entire lawsuit period.
Gives You Time to Negotiate
Defendants hate to part with significant settlement amounts and always push for an out-of-court settlement to get a fairer deal. Without financial challenges, a plaintiff will not take a raw deal and will have time to push for better terms. If the defendant decides to take the case to trial, the lawsuit loan will keep you financially covered for months. Moreover, an additional loan is available if the lawsuit takes longer than you initially anticipated.
Drawbacks of Lawsuit Loans
Although a lawsuit loan is a fast way of getting financial help when injured or jobless due to an accident, it’s the wisest choice. Below are drawbacks that you may experience in lawsuit loans:
A lawsuit lender may give you a loan with as low as 3% monthly interest which looks good. Considering that you’ll pay the principal sum and interest, it’s necessary to go for lower rates. Most personal injury cases will go for months or years before arriving on a settlement. Though the interest rate is constant, the final amount paid as interest and the principal sum will be twice or thrice the initial loan.
Does the lender charge a compounding interest? How often do they compound these loans? You don’t want to be paying interest on top of another interest when you get a lawsuit loan. Ensure the company has low compounding rates before consenting to the loan.
Borrowing against your 401(k), property, insurance proceeds, or approaching a credit union can save you from high-interest rates in lawsuit loans. However, you may lose your retirement or property due to foreclosure.
Only Select Cases Qualify for the Loan
Lending companies are after profits and cannot risk their financing to a losing battle. They lend to lawsuits that have water-tight chances of getting hefty settlements. The lenders also weigh your legal representation and their chances of winning the court battle before going through with your financial request. Sometimes, plaintiffs might have to apply for a loan to more than six companies before getting an interested lender.
Lawsuit Loans are Unregulated
Lenders are prone to increase interest rates to their liking because the state does not regulate them. These loans are not referred to as actual loans since they’re non-recourse. Therefore, look at all the terms and ensure no hidden costs might arise when settling the loan.
Can you get a Lawsuit Loan from Your Attorney?
Lawyers are prohibited from providing pre-settlement loans to their clients. Lawyer’s character becomes questionable the moment they engage in cash funding and might lead to withdrawal of the lawsuit on the grounds of compromised ethics.
When an attorney gives a pre-settlement loan, you’re unsure they’ll be patient until the case is determined. Often, such lawyers will push you for an early settlement as long as they get their money. Also, if a client is displeased by the lawsuit outcome, this may raise questions, especially when the legal representative decides not to give you the settlement money.
Roles of an Attorney in a Lawsuit Loan
It’s now apparent that attorneys cannot give their clients loans. However, these professionals are crucial in any lawsuit loan application process. They partner with different lenders, and their input will be crucial in getting a fast loan. Also, the lawsuit pre-settlement companies depend on the attorney’s assurance of the case success before disbursing the loan.
Discussing your financial challenges with the appointed attorney before proceeding with the loan application is essential. The experts must sign a funding agreement by the lender and can guide you on what to borrow.
If you’re about to cave into a shoddy settlement for fear of financial constraints, it’s time you looked for a lawsuit loan and embarked on a serious court battle with the defendant. Speak to your lawyer and get advice on where to seek these loans to salvage your lawsuit from a low settlement.