Many people are familiar with cash advance offers on credit cards. Although most credit cards will not allow you to take your entire line of credit in such an advance, you are usually allowed to take a limited amount out. There are typically fees as well as high interest rates associated with credit card cash advances.
If you find yourself in the middle of a lawsuit, you may be tempted to request such a credit card cash advance to help you pay medical bills, daily living expenses or other accident-related costs. However, there is a lower risk, lower interest rate option available for you in the form of a lawsuit cash advance.
Definition of a Lawsuit Cash Advance
Lawsuit loans are special cash advances that are provided to individuals waiting for a case to make its way through the legal system. In many cases, lawsuits can take months or years, making it a financial challenge to get through the typical repair and medical bills associated with a personal injury accident.
These loans vary somewhat by type and can be secured at various times throughout the legal process. For example, some are available between a court filing and jury verdict while others are paid out between the settlement and receipt of the actual check. In some cases, loans can be secured without a court filing at all or during the appeal process.
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Advantages of Lawsuit Cash Advance
Taking out a loan in this fashion holds many advantages for the borrower.
First, a credit card or bank cash advance must be repaid regardless of financial situation. Lawsuit cash advances are only paid back if you win the court settlement. If you lose your case, you owe nothing. As a result, your risk is significantly lower.
Second, cash advances from a bank or credit card can carry extremely large interest rates, which will be an added expense for you in the long run. Legal loans, on the other hand, typically have very low-interest rates. Many, in fact, run between 1 percent and 3 percent, depending on the strength of your case.
Requirements for Securing Legal Cash Advance
In general, it is relatively easy to secure a settlement cash advance. The application is short and fast, designed so that you can get your money quickly. However, there are a few requirements that may vary by state or loan company.
You cannot have any bankruptcy filing on your record to secure a legal loan. In addition, you may be required to work with a contingency-fee-based attorney who can review and sign off on your loan paperwork. Your lawsuit may also be reviewed to make sure the defendant has the funds to pay the eventual settlement, and in many cases, a personal injury must have taken place.