Facing a lawsuit can be a long and exhausting legal process and can be one of the most challenging times in a person’s life. If you are undertaking a lawsuit because of a personal injury, because of wrongful imprisonment or are pursuing corporate litigation you will likely go through significant and unexpected financial upheavals while seeing the process through to a successful conclusion.
In some cases, waiting for the financial settlement you have been awarded can lead to a personal financial crisis in the meantime. Many factors can result in a long settlement period. These can include delays by the insurer, waiting for a court date (because of scheduling conflicts), additional litigation or undergoing an arbitration process, among others.
The most important thing that you must ensure in your lawsuit is that you do not settle for less than the compensation amount that you deserve. In many cases, insurance companies will offer a settlement amount that is substandard or lower than the amount that is offered for other, similar cases. They do this to target plaintiffs who are having financial problems as part of the litigation process in a bid to get them to accept a lower amount of compensation. However, once you accept a compensation amount (whether it is fair or not) you will be unable to pursue any further financial compensation, no matter how inadequate the settlement may have been.
An option is available to avoid this situation that is called lawsuit funding. Lawsuit funding involves borrowing money against your future settlement amount to be able to finance your litigation and pay for your expenses while the case proceeds to ensure that you receive the largest settlement amount to which you are entitled. Borrowing money through lawsuit funding is aimed at plaintiffs that do not have other avenues of raising finances, such as being unable to get a loan from financial institutions or being able to loan money from family and friends, to help continue their litigation.
Getting funding for a lawsuit has several advantages and people often ask ‘What are the 4 advantages of lawsuit funding?’. These 4 advantages are described in the following sections.
Use the Money for Essential Living Expenses
Lawsuit loans were created to help people undergoing litigation for cases that left them in severe financial difficulty. Lawsuit loans were intended to help with day-to-day living expenses and any emergency expenses you might need to deal with while waiting for your case to settle. For people suffering personal injury this often involves medical expenses but for others it can include maintaining mortgage and car payments and other financial commitments while waiting for a case to settle. It can also be used to pay off your credit card bills, business expenses or rent on your home that would otherwise cause you personal difficulties.
It’s important, though, that you only use the money for essential expenses since it must eventually be repaid from any settlement you receive – it is not free money. You should regard it as an investment in your lawsuit and use the money you get wisely. It is best to only use the money for things that you need (rather than luxuries such as new clothes and holidays) since this is a loan against a financial settlement from your lawsuit which will deliver only the necessary compensation for your particular circumstances.
This type of funding, however, is often a lifeline if you are living from paycheck to paycheck and the loss of your job means you will be in dire financial straits. Essentially, it will help you to survive financially until your compensation from the courts comes through.
Lawsuit Loans are Free of Risk with No Payments
Lawsuit loan companies will assess your legal case and circumstances to determine whether you have a good chance of succeeding in your case. They will determine how much you can expect to receive if you win or negotiate a settlement and will then offer to loan you a sum of money against the proceeds of the settlement and charge you an interest fee on the amount borrowed.
The important thing to know is that there are no monthly repayments that you will need to make since the loan and interest is repaid in its entirety once a settlement has been reached. One of the best aspects of these loans is that if you lose your case, you don’t have to repay the loan; the company funding the lawsuit takes the risk but it does means that this type of loan is more expensive than other types of loans. In addition, if your settlement is less than the amount you expected, you will not have to pay any more than the total amount of your settlement when repaying the loan.
Lawsuit loans may not be suitable for every plaintiff but they can be a food option if you are having trouble covering the expenses of your legal action and living expenses while waiting for a decision from the courts and are very confident that you are due a certain amount as a settlement.
Pay For Medical Expenses
If you are suing for compensation because of a personal injury you will know that the medical expenses you must pay will not be paused or stopped because you have not yet received your financial settlement. The fact is that people suffering from severe injuries cannot wait for the court system to make a judgment when they need immediate care. Lawsuit loans, in fact, originated from the pre-settlement funding industry that began some 20 years ago to help people in need of urgent medical care.
Lawsuit loans are particularly useful to people that have suffered an accident and cannot work while their case is being litigated in court. They are beneficial in personal injury cases where the victim cannot work or earn any money because of the seriousness of their injuries. A victim of medical malpractice, for example, who has suffered an injury that means they cannot work will seek financial relief from the court as compensation for their economic losses. Until they receive that compensation, however, they will be left to their own resources and potentially be unable to pay for their medical bills or for a medical emergency that may occur while they are waiting.
In these cases getting financing for litigation is a temporary solution which allows you to stay afloat financially and pay your medical expenses while the compensation case winds through the courts and reaches its final settlement. Once the settlement is finalized you will repay the lawsuit funding amount from the compensation you are awarded.
The amount that you can borrow will depend on your personal situation and the severity of your injuries which will determine the expense of your health care and take into account any other emergency financing you need (to pay home or car loans, for example).
Get a Better Settlement
One of the more important reasons when looking at pre-settlement funders like 500 Cash Out or JG Wentworth is to know that it ultimately improves your financial position if you win the case. The reason is more time. Time takes away the defense counsels leverage. Those who opt to get lawsuit funding tend to be in situations where your financial position means you are forced to accept a smaller settlement than you are owned. It is well known that insurance companies will seek to minimize their payouts wherever they can and will use stalling tactics to prolong a legal action in order to force a plaintiff to accept a lower settlement amount than that to which they would otherwise be entitled. One of the main benefits of lawsuit funding is that you can fight the lawsuit for as long as required in order to get the maximum settlement amount that you deserve. It enables you to fight any delays that the defendant uses against you and counter the threat of long waiting periods for a court date which they will use to force you to accept a lower settlement offer that you will be obliged to accept for financial reasons.
In many cases a plaintiff runs out of money in the middle of a lawsuit and does not have the financial means to support themselves and continue the cases. A loan against your lawsuit is always an option you can use to wait until the lawsuit reaches trial or a better payment offer is made. You will need to assess carefully, however, the overall cost of the lawsuit loan and how much you borrow remembering that the financier of your loan is also taking a risk and needs to be compensated adequately for doing so.