If you are a plaintiff expecting monetary compensation from an active lawsuit, you may have heard the terms “settlement funding” or “presettlement loan” in regards to your case. The fact is, taking out a loan for settlement purposes is becoming a very popular option for plaintiffs who want cash now but don’t want to wait for their cases to settle.
If you’re getting mixed information regarding loans for settlement, we can help to dispel a few falsehoods for you.
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MYTH #1: Pre settlement funding is impossible to understand
FACT:
With all the conflicting information out there, it sure can seem that way. While you may be searching for ways to obtain a “loan on my lawsuit” or “lawsuit loans,” chances are good that what you are really looking for is a settlement loan. A settlement loan is basically a cash advance loan for your anticipated settlement amount prior to the final resolution of your case.
MYTH #2: I have to wait months or years to get a settlement payment
FACT:
Most court cases can take a long time before they’re settled. But that doesn’t mean you have to wait for your settlement payout. Pre settlement funding exists for this very reason.
Say you are expecting a large settlement from your lawsuit. Rather than wait out the many months for a final ruling on your case, you could get a loan for your settlement amount within days. Yes, days.
MYTH #3: Acquiring a loan for settlement is too confusing
FACT:
The process is actually pretty simple. Here’s what you can expect:
Step 1: Speak to your lawyer. It’s important that you do your research on pre-settlement funding to make sure you are fully aware of the terms and conditions of your potential funding arrangement, and your lawyer will help you to understand the ins and outs.
Step 2: Choose a funding company. Your lawyer may be able to suggest a good funding company, but you can also do some research on your own.
Step 3: Fill out an application. The application should be brief, and more importantly, free. There should absolutely not be any upfront fees. After your lawyer submits the necessary paperwork, the funding company will do some minor research to find out if your case has merit.
MYTH #4:
I’ll be expected to deal with a mountain of paperwork
FACT:
There aren’t countless forms for you to fill out but the first step toward obtaining a loan for settlement will be for you to fill out a preliminary application with the funding company. Generally, the information they are looking for will be your basic contact information, the type of case you’re litigating, and the name and phone number of your attorney. There should be no application fee or credit check.
Once the application has been completed, the funding company will immediately contact your attorney to request any legal documents that can assist them in evaluating your case. Most funding companies won’t ask your lawyer to fill out a lengthy application on your behalf; they simply need to request a few key documents to help assess the merits of your claim.
MYTH #5: There isn’t any reason to take out a loan for my settlement amount
FACT:
If you have suffered an injury or loss due to someone else’s negligence, you may suddenly need money to help cover a wide range of unexpected damages and expenses. Whatever those bills may be: Mortgage, rent, car payment, utilities, college tuition, surgery, back-to-school costs… anything that you want to use the money for, you can. The choice is up to you to decide if a monetary influx is important to your needs at this time.
If you’d like to ease the stress caused by these or any other outstanding bills, taking out a loan for your settlement may be the right choice for you.
MYTH #6: A bank loan is less hassle than a lawsuit loan
FACT:
You may be in the process of researching a bank loan when a loan for settlement would benefit you more. Why’s that? Because a presettlement cash advance is a non-recourse loan. Non-recourse means you don’t have to pay back the money if you lose your case. No monthly payments; no interest fees. No credit checks; no collateral. With a bank loan, the borrower has to have collateral and credit, and be prepared to incur fees and interest charges no matter what. A loan for settlement is based entirely on the merits of the case, and nothing else.
If your case is strong, then you will not be denied unless you are in an active bankruptcy or owe child support liens. The best funding companies will be able to get you the lowest cost loan for settlement to suit your needs.
MYTH #7: My lawsuit probably won’t even qualify for presettlement funding
FACT:
Most funding companies focus their efforts on automobile accident and personal injury cases, including slips and falls, premise liability, medical malpractice, and construction accidents, amongst others. However, many funding companies will consider almost any case in which there is liability, damages, and insurance, such as wrongful termination, discrimination, sexual harassment, sexual abuse, and more. Plaintiffs have been awarded a loan for settlement for lawsuits of every kind.
Whether you receive an offer or not will depend on the expected value of your case and risk associated with it. Not every case will be approved; only cases that show clear fault on the defendant and clear injuries to the plaintiff will be approved for a loan for settlement. Defendants must also have good insurance to ensure someone will pay for the damage they caused to the plaintiff. A good lawsuit funding company will find a way to get you the money you have coming to you.
MYTH #8: All funding companies are shady
FACT:
While there are some unscrupulous funding companies out there, there are some really helpful ones, too. Most reputable funding companies want you to get a fair deal; those are the ones you want to work with. It may seem overwhelming at first, but asking the right questions will help you zero in on your options.
The most important thing in picking a funding company is to ensure that they are a direct funding source, and not a broker sending your case to another funder, strapping you down with added fees.
Some shady presettlement funding companies charge an application fee, an origination fee or some other kind of bogus processing fee which can cost hundreds of dollars, but a reputable funding firm won’t have upfront costs. Your loan for settlement application should be reviewed for free, and any payback fees should be lain out clearly in your contract before you sign. If you don’t like the terms of the contract, you can simply deny the funding and move on.
MYTH #9: The fees are too high to even consider a loan for settlement
FACT:
It is important for you to speak to a reputable company that has fair rates and fees to ensure that when it comes time to settle your case, that your funding company doesn’t take the lion’s share of the settlement. The rates and fees of loan for settlement contracts can vary, so what matters most is that the payback terms are clearly disclosed on your contract.
Costs can range from 1.99% per month to 3.99% per month in compounding interest. Most have rates ranging from 30% to 60% annually, and there are also different types of contracts that charge no more than 200% of the amount funded. A conversation with your lawsuit loan funder will give you a more comprehensive idea of any costs. Companies that charge over 2.99% per month generally are on the expensive side and you’ll want to avoid them. Conversely, almost no companies charge less than 2.5% on presettlement funding cases.
You should only take the amount of money that you absolutely need to get by. In the end, a cash advance loan is expensive and will cut into your ultimate settlement. Contrary to what people think, lawsuit settlement funding companies do not want to see this happen. If they are reputable, they will advise you to only take what you need.
Lawsuit settlement funding provides consumers with financial options. Some may be good or some may be costly, but at the end of the day, the decision to proceed with a lawsuit loan is up to the consumer. Lawsuit funding is a viable service when utilized correctly.
MYTH #10: I would essentially be selling my lawsuit for pennies on the dollar
FACT:
Many people think that once you take a pre lawsuit loan that you are selling your lawsuit. That is not the case. The funding company only wants to invest in a portion of your recovery, charge you usage fees or “interest” as if it were a loan, make a return, and move on. They don’t want to own your case or buy it from you, hence the percentage limits, which are normally limited to 15% to 20% of the total value of your settlement.
MYTH #11: Lawyers don’t like when their clients take out loans and would rather wait for the case to settle
FACT:
Even if you’re just at the consideration phase of working with a lawsuit settlement funding company, you’ll want to consult with your legal counsel before proceeding with anything regarding your case. They will be able to help you with the decision to take advantage of a lawsuit loan if you ask their advice, but they may also discourage you from taking a presettlement cash advance on your case.
Consider, however, that your lawyer or law firm may not be able to appreciate the dire financial situation you may be in, and how taking even a small loan for settlement to pay bills may be a huge relief. Ultimately, the choice is yours. In any case, applying for a lawsuit loan will require at least a modicum of assistance from your lawyer.
Thankfully, loan for settlement contracts are very transparent and explain exactly what you can expect, but you will still need your lawyer’s assistance—if not necessarily their approval—before moving forward.
MYTH #12: This is just one more thing to stress me out
FACT:
Probably the greatest advantage to acquiring a loan for your settlement is peace of mind. Worrying over the details of your lawsuit can cause seemingly unending stress. Couple that with financial strain, and it’s enough to instill unfathomable fear as well. A presettlement loan can help to lift the burden and offer you room to breathe.
In Conclusion:
Lawsuit funding provides consumers with financial options. Some may be good or some may be costly, but at the end of the day, the decision to proceed is up to the consumer. Loans for settlement are a viable service when utilized correctly.
Obtaining a loan for settlement can be a very expedient process. Since knowing the exact date your court case will settle is an impossibility, a loan against your lawsuit settlement can be a great way to get the cash you have coming to you without having to wait. While the course of action may take longer or shorter periods of time depending upon your specific situation and case, if you’re dealing with a reputable funding company, the time from application to cash-in-hand can be as little as 48 hours.
Legal-Bay is one of the best pre settlement funding companies in the industry. We’d love to speak with you and show you why. If you’d like to know more about lawsuit funding or about loans for settlement, you can visit our FAQ page, and feel free to contact us for more information on how you can obtain a non-recourse cash advance loan on your lawsuit.
