It can be incredibly stressful when you were in an accident and are waiting on a settlement. Accident victims often have high medical bills, are unable to work, and need money to pay their mortgage, utilities, car payments, and other expenses. So, what should you do when waiting for your settlement check? One option is a lawsuit loan.
A lawsuit loan can give you much-needed cash while you wait for your settlement to come through. Despite the name, a lawsuit loan is a cash advance on your payment. While the case is still pending, a lawsuit loan company provides you with a cash advance on the anticipated settlement.
The cases that are usually eligible for a lawsuit loan are as follows:
- Car accidents
- Personal injury cases
- Workplace injuries
- Slip-and-fall injuries
- Medical mistakes and malpractice
- Wrongful death
How Lawsuit Loans Work
To get a lawsuit loan, you apply for the loan after you file your lawsuit. The lending company looks at your case’s strength and weighs the odds of your winning the case or obtaining a settlement. Then, the company estimates how much they think you will receive in payment. Based on this analysis, they may offer you an advance on your settlement.
Of course, companies offering lawsuit loans are in business to make money. When they provide you with an advance, they charge fees and interest that come out of your future settlement.
In a sense, a lawsuit loan is not risky because you do not make payments until the case settles.
What if You Lose?
If you lose your case, you probably do not need to repay the advance. The lawsuit loan lender usually cannot recoup their money unless you win. The risk of loss is part of their business model.
If the settlement is less than the company expected and is less than what you agreed to pay back, the lender probably cannot demand the difference. It might only be able to claim whatever proceeds are left after attorney and court fees are paid.
However, keep in mind that you could be left with little money at the end of the case once you pay attorney fees, court costs, and lawsuit loan interest and fees. You will also pay interest and expenses while you are waiting for the case to conclude.
Lawsuit Loan Advantages
Lawsuit loans are good financial products that offer advantages to many people:
- You receive money for your living costs. If you are injured, you either may not be able to work or may not be able to work as much as you used to. But your bills still need to be paid, and your lawsuit loan provides you with a lifeline. Even if you pay interest and fees, you will probably feel like it is well worth it for the financial peace of mind.
- You do not need good credit. Many lawsuit loan companies do not consider your credit. They only look at the likelihood the case will succeed and result in a large settlement.
- You can get funds quickly. Some lenders can get money in your account within a few days.
- You have more room to negotiate. This is a significant advantage. With cash in hand, you have more time to let your attorney negotiate the best settlement possible.
The primary risk of lawsuit loans is the interest and fees you pay. It is essential to find a company that offers you a fair rate and fees. It is also recommended to have your attorney deal with the lawsuit loan company and get you the best deal. Your attorney is probably familiar with these financial products and can provide you with excellent counsel.
Overall, these loans are not risky if you go in knowing exactly what you are paying.