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Loans for Lawsuits: Should I Get a Loan for a Personal Injury Suit?

Are you currently in litigation for a personal injury case? Are you running out of cash? Here’s what you need to know about loans for lawsuits.

Are you struggling after an accident? Are you dealing with serious injuries?

The settlement process is often fraught with delays and extensive negotiations. These road bumps can leave you without money for long periods.

However, consider loans for lawsuits. They’re short-term bridge loans that you give you more time until you receive your settlement.

They’re designed to help victims suffering from bureaucratic delays or stalled negotiations. The loans can also help you wait for a larger settlement. Best of all, these types of loans are more flexible than conventional loans.

This article will reveal everything you need to know about loans for settlements. Let’s explore.

Advantages of Lawsuit Loans

Lawsuits tend to be expensive. Also, your personal injury may have forced you out of the workforce. Therefore, you may not have enough expenses to cover your lawsuit.

This is where a personal injury loan can help. These loans can cover your immediate court costs as you seek justice. These loans are also imperative if you must file a lawsuit to receive long-term compensation. The following may apply to you: 

  • You’re suing for workers’ compensation.
  • You need to pay attorney fees.
  • You need a hefty payout to cover extensive medical injuries.

Too often, victims don’t have enough funds to cover court expenses. As a result, they miss out on just compensation. Without compensation, your injuries could grow worse, and it could take longer to return to work.

Loans for lawsuits can also cover your personal expenses. Perhaps you have a mortgage to pay. You may also have smaller bills piling up. The loans can also pay down your medical bills.

Many victims think they can hold out until they receive their money. However, the negotiation process often takes time. In many cases, insurance companies or defense lawyers offer meager settlements from the start. 

  • Example: Insurance companies usually offer low payouts to save money. However, a lawyer will negotiate on your behalf. The negation process can take anywhere from one week to several months. 

In the meantime, you can take out a settlement loan to pay for your living expenses. 

How Settlement Loans Work

As your lawyer negotiates a proper sum, a lender can claim a portion of your settlement. The lender will front you an agreed-upon sum, and you will pay back the lender when you receive your settlement.

Many borrowers use this option to pay their bills and medical costs. Additionally, settlement loans give you enough time to get a larger award. In many cases, settlements can double throughout the negotiation process. 

If you take out a small pre-settlement loan, you’ll have enough money to pay for your short-term needs as you wait for a long-term payout. Therefore, the loan allowed you to get more money in the long-run. 

Qualification Standards

The terms of a lawsuit loan depend on the lender. In some cases, a lender may decline your application based on the nature of your case.

When it comes to credit scores, lenders generally don’t prioritize your financial background. They’re more interested in your case. As a result, you can get a lawsuit loan with bad credit. 

They could also reject your application if they don’t like the progress of the negotiations. In other cases, you can find lenders who accept all types of lawsuits. 

  • Example: Nearly all negligence cases usually qualify for financing. However, lenders may not offer loans in certain states. 

Lenders may also fund workers’ compensation claims. If you must take an employer to court, you can receive immediate funding until your benefits apply. After, you’re free to use the money how you please. 

Above all, your attorney must be involved in the settlement loan process. The attorney must forward the paperwork to the lender about your case.

The lawyer must also agree to transfer the loan sum to the lender when you receive the award money. Your attorney also doesn’t have the authority to prevent your request for personal injury loans. 

The Underwriting Phase

After your attorney gets involved, a loan company will forward your application to the underwriting department. The underwriters will study your case and assess how much you may receive overall.

They usually compare your case to previous cases matching your circumstance. The underwriters will approve your application if your lawsuit has enough value in their eyes. 

  • Note: In most cases, lenders won’t usually loan you more than 20% of your total settlement amount. If they value your case for $25,000, for example, they may loan you $5,000 instead. However, the lending threshold depends on the lender’s risk appetite. 

After underwriting approval, the loan company will draw up an agreement that you and your attorney must sign. 

Ethical Questions

Settlement loans are perfectly legal and can help victims through tough times. With that, you may come across disreputable lenders looking to take advantage of victims.

Therefore, find a lender who has a great reputation. Read online reviews about the lender to see if they’re trustworthy. 

Loans for Lawsuits: Are They Worth It?

When dealing with loans for lawsuits, consider this option if you’re struggling to pay your household bills or medical bills. It’s also a great option if you’re still going through the negotiation phase and need a financial lifeline.

Additionally, many borrowers use the money to pay short-term court costs. Overall, these loans give you more time as your attorney advocates a higher settlement amount. 

Are you interested in learning about the differences between structured settlement loans and pre-structured settlement loans? Click here to learn more. 

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