When someone is involved in a lawsuit, it can often take a long time to resolve the case. It can be especially difficult for plaintiffs struggling to make ends meet while waiting for their settlement. Pre-settlement lawsuit loans can solve this problem by providing plaintiffs with the cash to cover their living expenses and other financial obligations until they settle their cases.
What are pre-settlement lawsuit loans?
Lenders provide pre-settlement lawsuit loans, or litigation funding, as cash advances to plaintiffs before they resolve their lawsuits. This type of loan is typically offered by a third-party company, also known as a litigation funding company, based on the potential outcome of the plaintiff’s case. The lenders estimate the settlement or award the plaintiff will receive and base the loan amount on that value.
Unlike traditional loans, lenders do not base pre-settlement lawsuit loans on a plaintiff’s credit score or employment status. Instead, the loan is based solely on the strength of the plaintiff’s case. It means that plaintiffs who might not qualify for conventional loans due to poor credit or lack of income may still be able to receive a pre-settlement lawsuit loan.
How do pre-settlement lawsuit loans work?
A plaintiff must contact a litigation funding company to apply for a pre-settlement lawsuit loan. The company will then evaluate the plaintiff’s case to determine the likelihood of a successful outcome. This evaluation typically includes reviewing the plaintiff’s medical records, police reports, and other relevant documents.
Once the litigation funding company has evaluated the case, they will offer the plaintiff a cash advance. This advance can range from a few hundred to tens of thousands, depending on the estimated settlement value or award.
If the plaintiff accepts the loan, they will sign a contract outlining its terms. These terms typically include the amount of the loan, the interest rate, and the repayment schedule.
How can lawsuit loans help during inflation and the current economic situation?
The current inflation rate in the United States, as of March 2023, is around 6.2%. It means that the prices of goods and services have increased by an average of 6.2% over the past 12 months. The effects of inflation can be tough on low-income households, as they often need more financial resources to absorb the increased living costs.
Lawsuit loans can be a helpful option for individuals struggling to make ends meet during inflation. These loans can provide plaintiffs with immediate cash to cover their living expenses and other financial obligations, which can help reduce the financial stress many experiences during inflationary periods.
Advantages of pre-settlement lawsuit loans
Pre-settlement lawsuit loans can offer several advantages to plaintiffs involved in a lawsuit. These advantages include the following:
- Immediate cash: Pre-settlement lawsuit loans provide plaintiffs with quick money to cover their living expenses and other financial obligations. It can be essential for plaintiffs who cannot work due to injuries.
- No credit check: Lenders do not require a credit check for pre-settlement lawsuit loans since they base the loan approval on the strength of the plaintiff’s case. It means that plaintiffs with poor credit or no income may still be able to qualify for a loan.
- No upfront fees: Unlike traditional loans, pre-settlement lawsuit loans do not require upfront fees. It means that plaintiffs can receive their cash advances without paying upfront.
- Increased bargaining power: Pre-settlement lawsuit loans can increase plaintiffs’ bargaining power during settlement negotiations. Because the plaintiff has immediate cash, they may be more willing to hold out for a larger settlement or award.
- Reduced financial stress: Pre-settlement lawsuit loans can help reduce the financial stress plaintiffs often experience during a lawsuit. It can allow plaintiffs to focus on their recovery and build a solid case.
- Access to quality medical care: Pre-settlement lawsuit loans can provide plaintiffs with access to quality medical care, even if they don’t have health insurance. It can be essential for plaintiffs who have suffered severe injuries.
- No risk to personal assets: Pre-settlement lawsuit loans are non-recourse, meaning the plaintiff is not personally liable for loan repayment. If the plaintiff loses their case, they are not required to repay the loan, and their assets are not at risk.
Overall, pre-settlement lawsuit loans can be a helpful option for plaintiffs struggling to make ends meet while waiting for their settlement. By providing immediate cash and reducing financial stress, these loans can help plaintiffs to focus on their recovery and on building a solid case.
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