Lawsuits can help victims receive compensation for pain and suffering caused by negligent acts. But cases can take years, making it difficult for plaintiffs to survive financially until they receive their settlement. That’s where lawsuit loans can help.
Loan demand is a unique brand of financing that can be a lifesaver for plaintiffs who are struggling to keep their finances in line. Lawsuit loans are a cash advance that plaintiffs apply for if their funds are running low in a settlement process or lawsuit. Most lawsuit loans are used to pay the medical expenses of those without health insurance. But the funds can be spent on anything, including mortgage payments, car notes and daily expenses.
Lawsuit Loans Aren’t Actually Loans
Interestingly, lawsuit loans are not actually loans.
That’s because they are technically a form of payment “without recourse”. You only pay the funds back if you win your case. The loan repayment litigation is not expected until after your case has been resolved. In fact, many lawyers add the cost of this funding in basic reimbursable expenses in demand to determine damages.
If you do win your case, you will not have to repay the advanced funds. Neither your attorney or anyone else. So essentially, companies that provide lawsuit loans assume all risk and not you.
Qualifying For Lawsuit Loans
While personal injury cases are the most common litigation used with lawsuit loans, many types of cases qualify for this type of financing. A few are:
- medical and legal malpractice
- wrongful death
- wrongful termination
- breach of contract
- sexual harassment
- employment discrimination
- product liability
In terms of personal qualifications for lawsuit loans, there are none.
And why’s this?
Because no credit is actually carried out, the standard items for loan approval, such as a credit check and employment verification aren’t required. Instead, companies that offer loans of litigation base their selection on the merits of the cases they choose. They aim to support strong cases most likely to win therefore lowering their risk of losing money.
For these companies funding the loans, lawsuit loans are purely an investment tool. If you lose your case, they will walk away with nothing. But if they win, they will have the legal right to share liquidation. This right is based on the lien that gets placed where necessary to ensure the lawsuit loan. The lien gives the company the financing of a law to return when his case is resolved.
Given the high risk involved, companies that finance loans charge a significantly high fee for their services. Some companies may charge up to 15% of the amount of the settlement. This may seem like a high percentage. But if your case wins, it’s likely to provide you with more money than you get with a settlement advance, even after paying the lawsuit loan.