If you are the plaintiff in a personal injury lawsuit, you may be frustrated with the lengthy legal process. Your case may have already dragged on for months, and it may seem as if it will do so indefinitely. It is quite normal for personal injury cases to take many months to resolve, sometimes even years. The legal process can be exasperating. Meanwhile, you’re probably counting on a large settlement at the culmination of your lawsuit, and you’re getting stressed out waiting for your payout.
In situations where a plaintiff with an active lawsuit needs a financial boost, he or she may turn toward pre-settlement funding. Pre-settlement funding is essentially a cash advance against your pending case, and in some instances, can be thought of as a personal injury loan.
Personal injury loans enable you to relieve the financial stress that may be plaguing you since your accident. They are a great way to keep up with your bills and maintain your lifestyle while you await your settlement.
The following article will address some of the questions you may have regarding personal injury loans, and whether presettlement funding is the right choice for you at this time.
How am I supposed to pay my bills?
This may be the first and most important question you’re asking yourself right now. If you’re feeling cash-strapped and in need of financial assistance, you may be researching how to get some money from your personal injury lawsuit ahead of the court’s ruling.
You may be out of work due to injury and are experiencing a drastically reduced income. Your life may feel like it’s in limbo right now, but your bills couldn’t care less. The mortgage is still due; the electric still needs to be paid. You may even have medical or legal costs pouring in on top of your day-to-day expenses. Your payment obligations keep piling up at the same time that your earnings have come to a standstill; it just doesn’t seem fair that you can’t foresee any way to dig yourself out of the hole.
That’s the bad news. The good news is that people like you are the very reason why pre-settlement funding exists.
Does my case qualify for presettlement funding aka a personal injury loan?
If you are the plaintiff in an active personal injury lawsuit, the short answer is: most likely.
Pre-settlement funding is essentially a cash advance on the future compensation that you expect to receive from a claim. If you need money now to cover bills and living expenses, a personal injury loan is one way to get you the cash you need as quickly as possible.
The best place to start is by consulting your lawyer. He or she will be able to discuss the pros and cons of personal injury loans, and what will be expected from you in order to obtain one. Essentially, the merits of your case will be the deciding factor. A conversation between your attorney and your presettlement funding company will be able to provide the right answers.
Which claims are eligible for a personal injury loan?
The most common personal injury claims include:
- Product liability
- Premises liability
- Medical malpractice
- Assault and battery
- Birth injury
- Burn injuries
- Dog bite
- Caregiver neglect and/or abuse
- Slips and falls
- Car, truck, or boat accidents
- Wrongful death
But of course there are many other personal injury claims that aren’t listed here. The easiest way to find out if your case qualifies is to speak to a presettlement funding company.
Is a personal injury loan the right choice for me?
Personal injury loans are not for everyone. They are designed to be a bridge to help you get by financially until your case settles. Lawsuit settlements take longer than most people would like, and in the meantime, your monthly bills can’t just be put on hold. Borrowing some cash from your lawsuit is a good idea if you are unable to make a living due to your injuries and find your salary severely lessened (or halted altogether) because of it. In such cases, taking out a personal injury loan against your anticipated damages may be the best option for you.
What are “damages?”
In personal injury cases, “damages” is a term that refers to the amount of money awarded to the injured party (the plaintiff) who suffered harm due to the negligence, reckless, or intentional action of the defendant. Damages are classified as either general or special, and a plaintiff has the option to seek both.
General damages are awarded based on the defendant’s wrongful action when a clear link between their negligence and the plaintiff’s injuries can be established.
General damages can include:
- Physical pain and suffering, including disfigurement or impairment
- Mental anguish directly related to the injury
- Lessened quality of life
- Wrongful death (paid to surviving family members)
Special damages offers compensation for financial losses suffered due to the defendant’s actions. Special damages can include property damage and loss of wages due to injury.
Examples of special damages:
- Repair and/or replacement of ruined or lost possessions
- Inability to earn a living
- Medical expenses
How much of an advance can I take from my expected settlement?
Your eligibility for receiving a personal injury loan depends on the estimated value of your settlement. Typically, personal injury loans are limited to 15% – 20% of the total anticipated amount.
Even if you have already taken out a personal injury loan in the past, you may have since determined that it wasn’t enough. You may still be able to take advantage of presettlement funding, so long as the two combined advances don’t exceed 15% – 20% of the total estimated value of the settlement.
But how do I find out how much my case will settle for?
It may be difficult to calculate the amount of money a plaintiff can expect to receive. A good funding company will consult with your lawyer and review your case in order to come up with as accurate of a number as possible.
Variables that may determine damages can sometimes only be established in a court room. A damage award may be higher or lower depending on your attorney’s abilities and the sympathy of the jury, and are difficult to quantify in advance of the trial. Because of these vague aspects, damage awards will often vary from one personal injury case to the next, even if on the surface the lawsuits seem very similar.
Shouldn’t I just wait until the trial for the largest settlement possible?
Sometimes your personal injury lawsuit pits you against a large company, making the resources at your disposal feel like a David and Goliath situation. But, presettlement funding can afford you a leg up in this situation.
Big insurance companies want to pay you off with the lowest amount possible in the quickest amount of time. Accepting their lowball offer might be tempting, even though you know you’d be entitled to a much larger amount if you waited for your trial to conclude. Taking pre-settlement funding now will help you hold out until your case is settled. A bigger payout will also help to offset any loan fees you may incur from your lawsuit funding company. Basically, personal injury loans can literally buy you time to fight your case in the most effective manner possible.
What if I lose in court?
A personal injury loan is non-recourse, which means you are not obligated to repay the presettlement funding company, even if you lose your case. It’s a vital phrase that you should make yourself familiar with while researching any type of loan. More importantly, you should know that a personal injury loan on your lawsuit isn’t like other types of loans at all, and a much better option for a way to obtain some much-needed cash.
Personal injury loans do not require any upfront monthly payments nor interest fees. No credit checks; no collateral. Other types of loans don’t offer such ease of approval, and they are certainly not non-recourse. For this reason, personal injury loans are considered a viable option for plaintiffs who don’t want to wait for the money they have coming to them.
What will this cost me?
Out of pocket? Nothing. Some shady presettlement funding companies charge an application fee, an origination fee, or some other kind of spurious processing fee which can cost hundreds of dollars, but a reputable funding firm won’t have upfront costs. Your personal injury loan application should be reviewed for free, and any payback fees should be laid 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.
Costs for personal injury loans 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 presettlement 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 want to avoid. Conversely, almost no companies charge less than 2.5% on personal injury loans.
In short, personal injury loans are expensive. The funder is taking a risk in making an investment, as all presettlement loans are non-recourse, meaning the loan funder doesn’t get paid back if you lose your case. So, naturally, they need to get a competitive return to make up for any losing cases they invest in. Every funding company is different, but the lawsuit money is not free.
In many cases, however, the costs of a personal injury loan will be outweighed by allowing the plaintiff to hold out for a higher settlement. If the personal injury loan requires you to pay hundreds of dollars in fees to receive thousands more in your settlement, then it’s easy to see why presettlement funding can make financial sense.
What can I use the money for?
In addition to paying for living expenses, personal injury loans can be used to fund legal fees or medical expenses that are directly related to your claim… or not. Pre-settlement funding provides access to capital when you need it most, for such things as mortgage or rent, home improvement, credit cards, utilities, car payments, college tuition, business expenses, or even a vacation. Basically, a plaintiff can utilize a personal injury loan for any monetary needs—or wants—they may have. It’s entirely up to you.
How long do personal injury loans take to obtain?
Obtaining a personal injury loan can be a very expedient process. Since knowing the exact date your court case will settle is an impossibility, a loan against your personal injury 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 24 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 personal injury loans, 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 against your pending car accident lawsuit.