Is your civil case taking too long to settle, and you’re urgently in need of cash? Does your case have the potential of winning but it has taken a massive toll on your finances?
You may consider taking a settlement loan to cope with the pressure associated with the legal battle. Consumers rely on loans for lawsuit settlements for housing/food, transportation, childcare, and debt payments.
How do loans for settlement work? And what other considerations should you know before taking one? Here’s a thorough breakdown of this type of legal funding:
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Understanding Loans for Settlement
A settlement loan is a type of advance offered on the expected settlement of a pending civil case. Upon applying, the lender will thoroughly evaluate your lawsuit’s merit and weigh your winning chances. They will also assess the likelihood of a settlement and the exact amount you may receive.
The lender will only require you to make payments once you receive a judgment or settlement. They will subtract their cut from your settlement after covering the litigation expenses and attorney fees.
Depending on the lending agreement, there may be no mandate to repay the advance once you lose the case. If the settlement amount is way lower than the principal, fees, and interest, the lender will take whatever is left after you pay your prioritized expenses.
Types of Claims Covered
Your attorney must fill out a form describing your case for you to qualify for the advance loan for settlement. You may use the amount to cover your bills and expenses before getting a settlement or judgment. The expenses or bills here may include groceries, medical bills, car payments, mortgage, or rent.
You might seek the loan on a personal injury claim if someone else’s negligence resulted in your injury. The funding may also apply to product liability claims (product malfunctions causing injury) and premises liability claims (on an injury suffered on someone’s property).
Loans for settlement are also applicable to wrongful death claims (if a loved one passed away due to someone else’s negligence/actions). Lenders also allow you to seek them for medical malpractice claims (covering injuries caused by preventable medical mistakes).
Other cases covered by loans for settlement include wrongful termination, wrongful imprisonment, worker’s compensation, and security fraud.
Depending on the lender, you may also seek the loan for sexual abuse and harassment lawsuits, police brutality cases, and all types of pharmaceutical cases.
How Much Can You Get?
You can get a loan while waiting for a settlement depending on the estimated value of your case. For most lenders, the amount may range from $300 to $750,000. You may also qualify for more than one settlement loan depending on the financial burden of the lawsuit.
Most lenders process pre-settlement loans for class action or other civil cases in less than 48 hours. They’ll send you a quote with the breakdown of the loan amount and associated fees after applying.
If the quote is favorable, you may ask your lawyer to send additional information to the lender for loan processing. The lender will then send you the cash to your preferred payment platform.
Though you may qualify for more than one settlement loan, the total amount owed should stay below 20 percent of your lawsuit’s value. That’s because loans for settlement money are non-recourse, which means that the lender may not require you to repay the cash if you lost the case.
What are the Applicable Fees and Interest?
The interest rates on loans for settlement cases range between 27 percent and 60 percent annually. Your lender will assign a specific interest rate on your loan amount after estimating the timeframe for a settlement.
Note that interest rates, which compound monthly, are charged on the borrowed amount. The compound interest will keep adding up as your case takes time to reach settlement or judgment. You may be left with a substantial amount of money once the lender deducts their interest and principal.
Consumer Protection Guidelines
The laws on third-party legal funding in the U.S are quite overwhelming to an average person. Depending on your state, you may be protected by specific consumer laws when you seek a settlement loan.
The ARC (Alliance for Responsible Consumer Legal Funding) supports legal frameworks on consumer’s obligations and rights when it comes to lawsuit funding. This trade organization requires lenders to draft agreements in plain English for easier comprehension.
Which States Have a High-level of Legal Funding Protection?
Vermont, Oklahoma, Ohio, and Maine are among the U.S states with strong legal frameworks on legal funding. Indiana also has laws for the same, but there are limitations on how consumers access lawsuit funding. Consequently, legal funding laws in Arkansas and Tennessee don’t adequately cover consumer’s rights and obligations.
Legal Requirements Involved in the Loan Processing
The contract should cover all the fees and costs and give a six-month breakdown of the amount you owe. Inform your attorney about any agreements to be made and only sign them with your attorney’s approval. The lender should also avoid interfering with your case or mislead you with false advertising.
It is against the law to pay rebates, referral fees, and commissions to law firms, medical providers, or attorneys using the loan amount. Your attorney should also have zero financial interest in a potential legal funding lender. The lender will also enjoy the attorney-client privilege to ascertain the protection of your confidential information.
The law requires the lender to file all contracts and forms with the relevant authorities for approval. It also allows them to post bonds for solvency and include registration fees in the transaction.
Looking for Loans for Settlement?
Settlement loans help you address the financial burden that comes with a civil case. Your eligibility for this type of funding will depend on the nature of the case and its potential financial risks. Once you meet the requirements and agree to the terms, you’ll have the money in your bank account within a few days.
You can count on us for loans for settlement to benefit from our extensive industry experience and diligent support team. Apply for lawsuit funding today by filling out a detailed form on our website.
