Legal proceedings can be lengthy and costly, leaving you struggling to make ends meet while waiting for your case to be resolved. This is where lawsuit loans, also known as legal funding or pre-settlement funding can come in handy.
Well, lawsuit loans are more or less a safety net designed to provide you with financial assistance in your ongoing legal proceedings, including covering your living expenses and legal fees while waiting for your case to be resolved.
Let’s look into what lawsuit loans are all about, the benefits and more:
For starters, lawsuit loans are not loans in the traditional sense. They are more accurately described as non-recourse cash advances provided to you by specialised funding companies in exchange for a share of the potential settlement or judgement.
These funding companies assess the merits of your case before approving the funding. The repayment of the advance, along with fees and interest, only occurs if you win the case. If you lose, you do not have to repay the advance.
Lawsuit loans will give you that lifeline, especially when you are facing financial hardship while pursuing a lawsuit. Legal proceedings can be lengthy and expensive, and you often find yourself unable to cover essential expenses like rent, mortgage payments, and medical bills for injuries probably caused by an accident you are currently pursuing a compensation claim.
According to one research, two-thirds of people who file for bankruptcy cite medical issues as a key contributor to their financial downfall. This is where lawsuit loans can help bridge this financial gap, allowing you to maintain your financial stability and stay committed to your legal battles.
One of the most significant advantages of lawsuit loans is that they are typically non-recourse, meaning you are only required to repay the advance if you win your case.
If your lawsuit is unsuccessful, you generally won't be responsible for repaying the loan. This removes a significant burden from your shoulders, as you don't have to worry about accruing additional debt if your case doesn't go as planned.
Unlike traditional loans that involve a lengthy approval process, lawsuit loans are generally approved quickly. After providing the necessary documentation and information about your case, lenders can often decide within a few days.
If approved, you can receive your funds promptly, allowing you to address your immediate financial needs.
Lawsuit loans are not based on your credit history or employment status. Lenders typically evaluate the strength of your legal case and the potential for a favourable settlement or verdict. If you have poor credit or are currently unemployed, getting a pre-settlement loan may be the best option because you will automatically be disqualified by traditional loan lenders.
Lawsuit loan lenders quite often will not check your credit score or employment status. As long as your case meets the lender's criteria, you can still access these loans.
While lawsuit loans offer financial relief, they come at a cost. Funding companies charge fees and interest rates, which can be relatively high compared to traditional loans. Interest rates can range from 27% to 60% annually, and some lenders charge additional fees, such as origination fees or application fees.
It's crucial to carefully review the terms of the agreement and fully understand the costs involved before accepting the advance.
An attorney can play a critical role in the lawsuit loan process. It's crucial to discuss the decision to take a lawsuit loan with your attorney. They can help you find a reputable lender and evaluate the terms of the loan agreement.
Your attorney can also ensure that the loan amount is reasonable and that it won't jeopardise your case. Ensure that you maintain open communication with your legal counsel throughout the process.
Before accepting a lawsuit loan, make sure you fully grasp the repayment process. This includes understanding the total amount you will owe if your case is successful and the impact on your final settlement or judgement.
Unlike traditional loans, lawsuit loans are subject to less regulation. This means that you should exercise caution and thoroughly research the funding company you choose to ensure they operate ethically and transparently.
Not all lawsuit loan providers offer the same terms and rates. It's advisable to shop around and compare offers from multiple lenders. This allows you to select the one that best suits your needs and offers competitive rates.
Always read the fine print and ask questions about any terms you find unclear. Keep in mind that the terms of the loan can significantly impact your ultimate financial obligations, so choose wisely.
Lawsuit loans can be a valuable financial tool when facing financial hardship during the litigation process. They provide a lifeline if you would otherwise struggle to meet your basic needs while their legal cases are ongoing. Make sure you select a reputable lender to get lawsuit loans that serve your best interests in the long-term!