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The Truth About Lawsuit Settlement Loans

Lawsuit settlement loans, also known as pre-settlement loans, lawsuit loans or lawsuit funding, have become a popular option for plaintiffs seeking financial support while involved in lengthy lawsuits. These loans are often used to ease the financial burden of waiting for a settlement by providing plaintiffs with quick access to cash without any upfront costs or collateral.

There is controversy surrounding pre-settlement loans, however, with critics arguing that these loans cost too much, that their interest rates can take advantage of the plaintiffs, and potentially unethical practices by funding companies.

Are the critics correct?

We will look at both sides of this argument and give you the truth about lawsuit funding and the parties involved. So, let’s look under the hood at lawsuit loans by discussing the process, the parties involved and offer advice on what to look for when making a decision.

An Oasis in The Desert

Lawsuit settlement loans offer several benefits for plaintiffs. The main benefit, is providing them with the financial support they need to endure long legal battles without the overwhelming debt, comes with waiting for a settlement. Much like a lifeline, a lawsuit loan can keep you financially afloat while your attorney negotiates with the big insurance companies on your behalf. If you have nowhere else to turn for the financial help you need during this difficult time, then a lawsuit cash advance can truly be akin to “an oasis in the desert.”

A Necessary Evil?

This phrase gets thrown around a lot these days, as people try and justify things they do not agree with. “I don’t like it, but it’s a necessary evil” some might say. Well, this has been thrown around about lawsuit funding companies for years. But is this phrase really true, when it comes to pre-settlement loans?

We would argue that this phrase is the furthest thing from the truth. The fact is that there is nothing inherently evil about providing financial assistance to those who are most in need of it. But the people who say this are really saying, a lawsuit cash advance is just too expensive – or at least more expensive than it should be and they take advantage of plaintiffs.

But let’s look at this question in comparison to another practice that is common with personal injury lawsuits.

Would it be considered a “necessary evil” to hire an attorney that will represent you in your injury case, only to take 30% to 40% of the compensation you are awarded for your injury and other losses?

How about in the world of credit cards? Most Americans have at least one or two of them.

Is it a “necessary evil” that a credit card company will charge you two or three times the interest rate of someone else because they have better credit than you?

Is it unfair or evil, that your personal bank will not give you a loan to support your family, knowing you will “probably” receive a settlement and can pay is it back, with interest?

The answer to all of these is, no. It is just the way things are done.

Let’s ask the question another way. Would it be considered a “necessary evil” for a company to provide you with money to pay your bills without the need for a credit check or collateral, and you only have to pay the loan back if you win your case? Yes, there will be interest on the loan, but doesn’t the bank do the same thing, if they would actually do it, I mean?

When you put it that way, it is hard to argue that there is anything bad about a lawsuit loan.

A bank is not going to give out an unsecured personal loan without a credit check and simply on the merits of a pending lawsuit. And they certainly wouldn’t give you a loan like that at their best interest rate. Furthermore, if a bank ever did give out a loan like this, they would definitely want you to pay it back regardless of what happens with your lawsuit.

What about credit card providers? If you got hurt and need money because you are out of work, will a credit card issuer raise your credit limit to give you the money you need to get by? You know the answer to that question is almost certainly going to be no, especially if you have less-than-perfect credit. And if they do say yes, you can be sure that they will not give you a break on the interest rate.

Can you turn to family to loan you money? How about your attorney? He or she knows better than anyone the value of your case, so why can’t they give you a loan and take the repayment out of the settlement?

For most people, these options are nonexistent. And that is why lawsuit loan companies exist today. Born out of necessity, when plaintiffs had no one else to turn to, lawsuit loan or pre-settlement loan companies, at great risk, came to the rescue.

Advantages of Pre-Settlement Loans

Access to Funds

One of the main benefits of loans for lawsuit settlement is quick and easy access to funds that they can use to pay bills immediately. Unlike traditional bank loans that can take several days or even several weeks to approve, a lawsuit cash advance can be approved, and funds can be in your bank account within a matter of hours.


Another advantage of pre-settlement loans is the flexibility they offer. Borrowers can use the funds for anything, without restrictions.

Non-Recourse Funding

As we touched on earlier, pre-settlement lawsuit loans are “non-recourse”. This means the loan is tied to the outcome of the case. If the plaintiff loses the case, he/she is not responsible for

paying back the loan. If s/he wins the case, the repayment comes from the settlement under the predetermined terms and conditions.

This is a significant benefit as it reduces the risk for borrowers and protects them from incurring more debt in case of an unfavorable outcome. With non-recourse funding, plaintiffs can pursue their case with peace of mind, knowing that they will not be held personally responsible for the loan in case they do not win.

No Credit Check

Unlike traditional loans, pre-settlement funding does not require a credit check. This means that plaintiffs with poor credit scores can still qualify for a loan. Lawsuit funding companies base their decision on the merits of the case, rather than the plaintiff’s credit history. This is a significant advantage for individuals who may have credit challenges.

No Collateral Required

Lawsuit settlement loans are unsecured loans, meaning they do not require collateral. This is the direct opposite of most traditional loans that require borrowers to put up collateral, such as a home or car, as a form of security.

Strengthens the Legal Claim

Lawsuit settlement loans can provide plaintiffs with additional leverage during negotiations and help to strengthen their legal claim. Personal injury cases are often drawn out for months or even years. Insurance companies know the longer they can delay a payout, the more likely a plaintiff is to give up because of financial pressures and opt to settle the case. This financial pressure makes it more likely that a plaintiff will be tempted to accept a settlement offer – even if it is far lower than what their claim is actually worth.

By taking out a pre-settlement loan, the plaintiff has the financial relief they need to wait for a better settlement offer or take the case to trial if necessary. This puts their attorney in a better negotiating position and makes it far more likely that they will be able to secure the settlement that the plaintiff deserves.

The “Perceived” Downfalls of Lawsuit Loans

While pre-settlement loans offer several benefits, they also have some potential drawbacks, depending on the individual circumstances of the plaintiff. The following are some of the possible disadvantages of lawsuit settlement loans:

Higher Costs

One significant misconception of pre-settlement loans is that they can be considered expensive. In reality, they are not expensive at all.

These are non-recourse loans, which means the lender cannot collect anything if the plaintiff does not win his or her case, they are considered high-risk. As a result, the interest rates and

fees associated with lawsuit loans can be higher than traditional loans but lower than credit card companies in a lot of cases.

The value of the loan amount is also not as easy to assess. For example, if your case is worth $50,000, according to your attorney, then you may be able to get a $10,000 loan. But what if your attorney is wrong or maybe he was just hopeful?

What if your case is really only worth $25,000? Your attorney is still going to get his 30% to 40%, so you are at around $15,000. And what about the expenses of the case? That may be another $5,000.

That leaves you with only $10,000, which will not even cover the interest on the loan. So, as you can see, lawsuit loan companies carry ALL of the risk when it comes to these transactions.

In fact, because of the enormous risk with these cases, there have been several lawsuit funding companies that have gone out of business in recent years.

Ethical Concerns?

A lot of law firms will tell their clients to stay away from lawsuit loan companies out of ethical concerns. But who are they protecting?

Are banks ethical? Are law firms ethical when they take up to a 40% take of your settlement? As we mentioned, they aren’t going to give you money, banks aren’t going to loan you money, and friends and family don’t want to see you coming, so where are you going to turn when the medical bills pile up and the creditors keep calling?

All your attorney will tell you is “just hold on a little longer, a settlement is coming”. But in the meantime, how are you supposed to put food on the table?

Some lawsuit funding companies have been accused of exploiting vulnerable plaintiffs and charging excessive interest rates and fees. This may have happened; just like in any industry, there are always a few bad apples.

There are plenty of reputable lenders out there as well, and it is important for borrowers to do their due diligence. Look at reviews and talk to different lenders to find the right one for you.

Is a Pre-Settlement Lawsuit Loan Right for You?

While pre-settlement loans can be a helpful financial tool for plaintiffs, they also come with some potential concerns, the most important being the fees associated with the loan.

Maybe you have family members or friends who are willing to lend you the money you need at zero interest or with minimal interest. If that is an option for you, then take the money and don’t bother applying for a loan.

Maybe you own a home, or you have a sizable retirement account that you can borrow against. If these resources are available to you at a lower cost than what is associated with a pre-settlement loan, then you might want to go that route.

You should keep in mind, however, that a secured loan puts your collateral at risk if you are unable to make the payments while you are out of work because of your injury. There are no monthly payments with a lawsuit loan, and as we have talked about, the funding is secured by the eventual settlement or verdict from your lawsuit. So if, for any reason, things go south and you lose your case, you won’t have to pay anything back.

The bottom line is that everyone’s circumstances are unique, and you need to weigh all of the specific factors that apply to your situation before deciding if a pre-settlement loan is right for you. Consider all of your available funding options, and if you have any questions about lawsuit loans, we are here to help answer them. Feel free to call us anytime at 866-941-5588 to discuss your situation and/or to start the application process.

Camp LeJeune Lawsuits Update (May 2023)

If you were at Camp Lejeune for a period of at least 30 days from August 1, 1953, and December 31, 1987, and you have a medical condition that resulted from the contaminated water at the camp, you may be eligible to file a claim for damages. Furthermore, you may be able to secure a Camp Lejeune lawsuit loan to receive some of your compensation right away.

Here are the latest updates on the Camp Lejeune lawsuits as of May 2023:



The U.S. government is increasingly feeling pressure from the rising number of toxic water lawsuits related to Camp Lejeune. Recently, U.S. District Judge Terrence Boyle expressed his impatience with the Department of Justice (DOJ) lawyers’ request for more time, emphasizing the urgency of addressing the now 900 filed lawsuits. The DOJ’s focus is to develop a plan to offer reasonable settlements to victims of Camp Lejeune’s water contamination.



The Camp Lejeune litigation is now evolving into a pseudo-class action lawsuit, although it is not technically an MDL (multidistrict litigation) class action. The court will establish procedures for consolidating discovery, phased discovery, coordinating expert-related motions, coordinating dispositive motions, bellwether selection, trials, and settlement negotiations. This development is an essential step toward the government offering settlements to victims.



With thousands of plaintiffs filing Camp Lejeune administrative claims and hundreds of toxic water lawsuits in the Eastern District of North Carolina, the DOJ has been granted an extension to file answers to plaintiffs’ complaints until May 31, 2023. This indicates that the court will likely consolidate pretrial proceedings, which will significantly impact the litigation process and pave the way for future Camp Lejeune settlement offers.



Judge James C. Dever III emphasizes the importance of expediting the Camp Lejeune cases, acknowledging that victims cannot afford to wait for lengthy legal procedures.



Over 800 Camp Lejeune civil lawsuits are now pending in the Eastern District of North Carolina, with an average of over 20 new cases filed each day. If this pace continues, there could be over 2,000 pending cases by Memorial Day.



As the number of lawsuits grows, attorneys for both the U.S. government and plaintiffs are requesting that the cases be combined under one judge or that the court manages pretrial proceedings in a coordinated manner.



A significant spike in new Camp Lejeune civil lawsuits has been observed, with 179 cases filed in the Eastern District of North Carolina in just one week, nearly doubling the number of pending cases.



The inability of the government to act quickly on Camp Lejeune water contamination claims has serious consequences. The Department of the Navy has not yet developed a streamlined system for processing claims, leaving over 20,000 administrative claims unresolved.



Claimants must be cautious of scams attempting to exploit their personal information. No Camp Lejeune cases have been settled or heard in court as of this date.



The standard of proof for causation in Camp Lejeune lawsuits is lower, making it easier for victims to establish a link between their illness and the contaminated water.



The government has not yet created a system for processing the tens of thousands of anticipated lawsuits, potentially causing further delays.



Progress remains slow for Camp Lejeune water contamination lawsuits in the Eastern District of North Carolina Federal Court, with roughly 200 cases filed so far. Scheduling and trial dates have yet to be determined, while administrative claims continue to grow at a gradual pace, reaching approximately 25,000. It appears that the Judge Advocate General (JAG) of the Department of the Navy has not proposed any settlements, opting instead to let the 180-day review period lapse, permitting claimants to file lawsuits in federal court.



David Barrans, an attorney representing the VA, has clarified that submitting a Camp Lejeune claim under the Pact Act or Camp Lejeune Justice Act will not impact an individual’s eligibility for VA benefits. The VA has become more vocal on this matter, expressing concern that veterans may not apply for disability benefits due to pursuing a Camp Lejeune Justice Act claim.



In the Eastern District of North Carolina, an additional nine CLJA civil lawsuits were submitted, bringing the total count of Camp Lejeune lawsuits to 112, following the expiration of

the administrative claim deadline for the earliest JAG claims. JAG has recently disclosed receiving over 20,000 administrative claims related to the CLJA.



On February 10, 2023, the Camp Lejeune Justice Act advanced to the next stage of litigation. The Act, which passed on August 10, 2022, granted those affected the right to file claims and subsequent lawsuits for damages caused by contaminated water at the base.

The initial step requires individuals to file an administrative claim with the Department of the Navy (DON), which then has 180 days to accept, deny, or let the claim expire. If a claim remains unresolved after the 180 days, the individual may proceed with a lawsuit. As of February 10, 2023, thousands of initial administrative claims have expired without resolution, leading to the expectation that the Eastern District of North Carolina Federal Court will soon see a surge in lawsuits.

Submit Your Camp Lejeune Lawsuit Loan Application Today!

If you are involved in the Camp Lejeune legal proceedings and need monetary support while waiting for your case to conclude, consider applying for a pre-settlement loan from Direct Legal Funding, the industry leader in pre-settlement lawsuit funding. To determine your eligibility for an advance on your Camp Lejeune lawsuit settlement, contact us today at 866-941-5588 or apply online.