If you are already embroiled in a lawsuit, you’ve probably come to realize what a lengthy process it can be. It may take months—sometimes even years—before your case makes it to trial. In that time, you still have bills to pay.
Some people choose to research pending lawsuit loans as a way to get their hands on some much-needed cash prior to the resolution of their case. This can be a helpful option for any plaintiffs dealing with financial strain, and a great source of income over the many months it takes for a case to make it to trial. Borrowing against your anticipated settlement can help you stay afloat financially and empower you to hold out until the end of your trial so that your lawyer can get you the best possible settlement amount.
If you are asking yourself how do pending lawsuit loans work, Legal-Bay has the answers. Below are 10 frequently asked questions about pending lawsuit loans, including what you can expect during the process.
1. What is a pending lawsuit loan?
Case funding goes by many names: lawsuit loan, lawsuit cash advance, pre-settlement funding… Essentially, a pending lawsuit loan is a way to receive your anticipated settlement money now instead of waiting for a final ruling on your case. Considering how long it can take for a trial to conclude, pending lawsuit loans are a fantastic resource for plaintiffs who don’t want to wait for the money they have coming to them.
2. What are the benefits of taking out a loan against my pending lawsuit?
The number one reason that people look into pending lawsuit loans is to pay their bills. Whether you’re paying rent or a mortgage, leasing or buying a car, have credit card, personal, or medical expenses… the source of your debt makes no difference. Even if you’d like to start a business, take a vacation, or buy that new TV, it doesn’t matter what you use the money for. It’s your money. You can spend it any way you like.
3. Why wouldn’t I just get a bank loan?
Pending lawsuit loans are very different from bank loans. You may have already done the research on your own and found this out for yourself. If so, you’d know that while a bank loan seems like a logical solution to your financial woes, the truth is, if you are currently involved in a lawsuit and need money before your case settles, a pending lawsuit loan will benefit you more. Pending lawsuit loans are a way to get cash from your case before it’s settled, also known as “lawsuit cash advance loans,” and yes, even as “pre settlement loans.” But no matter what you call them, pending lawsuit loans are a much better option for a way to obtain some much-needed cash.
The reason why pending lawsuit loans are better than bank loans is because there is no recourse from the funding company if your lawsuit ultimately fails. “No recourse” means you don’t have to pay back the lawsuit money if you lose your case. No monthly payments; no interest fees. This is part of the risk that companies will assume in providing pending lawsuit loans.
With a bank loan, the borrower has to have collateral and credit, and be prepared to incur fees and interest charges, but none of those things are a factor when looking to qualify for a pending lawsuit loan.
4. Then what are the qualifications?
Pending lawsuit loans are based entirely on the merits of the case, and nothing else. Merit is the defining influence to determine whether or not you will be approved, and is based on three factors:
- Liability – Who is responsible for the plaintiff having been wronged?
- Damages – How much harm was caused?
- Insurance – Does the defendant have the financial means to compensate the plaintiff?
Once the lawsuit funding company determines there is merit to your case—and provided you’re not in active bankruptcy or owe child support liens—you will very likely be approved for a pending lawsuit loan.
5. Even if I’m unemployed?
If you suffered a personal injury on the job or through a medical procedure, terminated from employment due to discrimination, or intentionally abused by another party, you may be unable to work. Not only will you not be earning a paycheck, you now have mounting medical and/or legal bills that are difficult to pay on time.
The legal process can be lengthy and expensive, and the time it takes to receive your cash settlement can seem daunting. This is pretty much the classic scenario for why pending lawsuit loans exist. So, yes, you will still be able to obtain a lawsuit cash advance even if you are currently unemployed.
Also, many people who are injured and out of work cannot obtain traditional loans, so pending lawsuit loans are their only option. Plus, they are much faster. If someone applies for a bank loan or new credit card, those processes could take weeks, if not months. You can be approved for a pending lawsuit loan in just days.
6. This all sounds great. How do I get started?
If you think you’re ready to move ahead with a pending lawsuit loan, there are some steps you’re going to want to take to ensure the best outcome.
First, you’ll want to speak to your lawyer. He or she will be able to advise you on the pros and cons of pending lawsuit loans. You will need your lawyer’s cooperation in order to proceed anyway, so it makes sense to get in touch with them during the early stages of your inquiry. It’s important that you do your research 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.
Next, you’ll want to estimate the amount of funding you’ll need. Pending lawsuit loans are a viable option for plaintiffs to relieve some financial stress, but there are limitations. Normally funding is capped at 15% to 20% of the total estimated value of your settlement. While the money can be used in any way you want, pending lawsuit loans work best when the client takes only the amount of funding they need.
Your next step is to choose a funding company. There are many funders out there, and you’ll want to make sure you’re dealing with a reputable one. If your lawyer isn’t able to provide any names of pending lawsuit loan funders, a simple internet search will yield loads of information as well.
Once you narrow down your choices, you’ll want to give a call to the funding companies at the top of your list. At that point, you’ll be better able to make a final decision if you ask the right questions.
7. What kind of questions should I ask the funding company?
Here are a few to get you started:
Is the funding company a direct funding source or will they shop your pending lawsuit loan to a broker? You do not want to go through a lawsuit loan broker, as they charge higher fees. If you’re not sure if you’re dealing with a direct funder or a broker, ask the company if they are handling the loan on your lawsuit directly… or if they’re referring you to a loan company.
Does the funding company offer the lowest interest rate available for pending lawsuit loans? You should expect to pay anywhere 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.
What’s in the fine print? You’ll want to pay close attention to possible hidden administrative fees and compounding interest. Make sure you know exactly how much your pending lawsuit loan will ultimately cost you when your case finally settles.
8. Okay, I’ve decided on a funding company. Now what?
Now, you’ll want to fill out an application. Doing so requires no obligation on your part. The application should be brief, and more importantly, free. There should absolutely not be any upfront fees, and no income verification or credit checks will be needed.
Not every application will be approved; only cases that show clear merit will be considered for pending lawsuit loans. Most funding companies won’t approve a loan unless they are assured they will get their money back. However, if you’ve suffered any damages and have already hired an attorney, your odds of qualifying for a pending lawsuit loan are very good. Remember, your employment status, credit rating, or financial history have no bearing on the approval process. The facts of your case are all that matter.
Once the application is submitted, any work that needs to be done will be between your law firm and the funding company. Your attorney will be expected to provide some information about your case in order for the funding company to properly evaluate your claim and determine how much money you can borrow against your pending lawsuit.
After your application has been approved, the funding company will present you with a contract for you and your attorney to review. You’ll want to ensure that your fees are clearly lain out, and that you’ll be receiving the right amount of money from your pending lawsuit loan.
Pending lawsuit loan contracts are very transparent and explain exactly what you will owe when your case settles. Whether you like the terms or not, the decision is yours to either accept the funding, or deny it and move on.
9. If I accept the contract terms, how long will it be before I’m paid?
If you need money immediately, let your lawyer know. Hopefully, he or she will be understanding of your financial situation and assist you in your endeavor to obtain a speedy payout. Reviewing your case shouldn’t take more than a day or two anyway.
You read that right. 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 an efficient funding company, the time from application to cash-in-hand can be as little as 24 – 48 hours.
10.This lawsuit has been so stressful. How can I get rid of this feeling of impending dread?
Well, remedying your financial situation is a good start. And not to put too fine a point on it, but pending lawsuit loans can even pay for themselves.
At the beginning of a lawsuit, insurance companies throw lowball settlement offers at plaintiffs in the hopes that they are desperate enough to accept it. This is how insurance companies take advantage of cash-strapped plaintiffs.
Plaintiffs are often pressured into settling lawsuits at much lower sums than what they would actually receive by going through with a trial, but the right presettlement funding company can keep this from happening by obtaining fair compensation for the plaintiff.
You won’t need to fall victim to manipulation. A cash advance will help you survive financially through the entirety of the trial process without having to sacrifice the ultimate value of your case.
Most importantly, pending lawsuit loans can provide financial security when you need it most and offer you peace of mind. Worrying over your impending case can cause seemingly unending stress. A pending lawsuit loan can help to lift any economic burdens and offer you room to breathe. There are both pros and cons associated with presettlement funding, but at the end of the day, the decision to proceed is up to you. Pending lawsuit loans are a viable resource when utilized correctly.
If you have any lingering questions about pending lawsuit loans, Legal-Bay will be happy to help. If you’d like to reach out, we have an entire team of very skilled, very dedicated employees who will be able to offer all the details and answer any questions you may have.
We offer pending lawsuit loans on all different types of cases, and because the application is free and the loans are non-recourse, you really have nothing to lose. Your pending lawsuit loan is only paid back once your case settles, so there is little to no risk involved.
Please feel free to contact us HERE or call 877.571.0405 for more information.