After filing a lawsuit, it could take months or years before you receive money from your settlement. However, your bills won’t wait for that money to come in, especially if you’re facing high medical bills and a loss of income due to an accident. Defendants count on this financial pressure to force you to settle for a lower award.
As a result, plaintiffs often turn to one of two forms of financing: traditional bank loans or lawsuit loans, also known as pre-settlement legal funding. While they share some similarities, there are some major differences between these two forms of financing. Find out what makes bank loans different from legal funding and which of these is right for you.
Your Traditional Financial Options
Traditional financing in the form of a bank or personal loan typically comes with stringent qualifications on borrowers and firm repayment obligations. While a personal line of credit can appear cheap, you won’t be able to get one in most circumstances without a substantial amount of collateral, which you could risk losing if your case doesn’t go in your favor.
Borrowers usually need a high credit score to qualify to receive a loan. Additionally, they’ll need to repay whatever they borrow, regardless of how their case progresses. Once you’ve received your traditional financing, you’ll need to begin repaying it in monthly installments almost immediately.
Some types of traditional financing carry high interest rates, such as credit cards or unsecured loans. These differ from secured loans in that they don’t require collateral, but a lender could still sue a borrower if they refuse to or can’t pay. Your ability to keep up with regular monthly payments should be a factor you consider before choosing traditional financing.
What Are Lawsuit Loans?
A lawsuit loan is taken out against the hypothetical value of your future settlement. It can cover present expenses as you wait for your personal injury or other type of lawsuit to settle or resolve in court. As non-recourse debt, pre-settlement legal funding presents no risk to you and doesn’t need to be repaid if you lose.
Advantages of Lawsuit Loans
Lawsuit loans carry several advantages over other types of financing that make them an attractive option for plaintiffs. For one, they are much easier to get than traditional financing. Plaintiffs don’t have to go through a credit check to get legal funding, don’t need any assets, and can receive their funds in a day or less with a reputable company.
If you face mounting expenses and a loss of income as you wait for your settlement, a lawsuit loan could be a critical lifeline that allows you to keep up the fight. This can buy your attorney the time they need to negotiate a settlement that adequately and fairly compensates you for your injuries. If you happen to lose, you still get to keep the money from your legal funding.
Drawbacks of Lawsuit Loans
Lawsuit loans aren’t without their drawbacks, and you should know about them before making a decision. For one, you may not qualify for a lawsuit loan depending on your case or even which state you live in. Additionally, your loan could improperly value your settlement, causing you to leave money on the table.
Some lawsuit loans also come with high compounding interest rates that can eat up your entire settlement. However, reputable legal funding companies will only use low, simple interest rates. This makes it important to research potential lenders to find the ones that are suited for you.
How to Qualify for a Lawsuit Loan
When applying for a lawsuit loan, you’ll only need two basic things to qualify: a lawyer working on your case and a pending settlement. However, the specific facts about your case will determine how much legal funding you could be awarded. Here are some of the things that a legal funding company will consider before lending to you:
- The name and contact information of your attorney or law firm
- The expected value of your eventual settlement or compensation package
- The expected duration of your lawsuit
- Details about the nature of your injury, damages, and other pertinent factors in your case
- Which parties are believed to be at-fault and to what degree
With pre-settlement legal funding, all the risk is placed on the lender. In other words, you are not held personally liable for the debt if you lose your lawsuit. However, that means the legal funding company has to be careful and perform due diligence to protect their investors and stay in the business of helping injured people pursue justice.
For this reason, we require all clients to be represented by legal counsel. Studies performed by the Insurance Research Council show that injured people who are represented by a lawyer or legal team stand a higher chance of success in their lawsuit. Additionally, they tend to receive higher amounts of compensation than those who aren’t.
Apply for Pre-Settlement Lawsuit Loans Today
Tribeca Lawsuit Loans can offer you up to $1 million in legal funding for your settlement. Our application process takes just a few minutes and approval could come within hours. You could get money in your account within a day that you can use to spend however you wish.
Contact our team today to start your application and to find out more about how legal funding can benefit you. Our funding is nonrecourse and doesn’t need to be repaid if you lose your case. Let us give you the money you need to complete your fight for justice.