How To Get Lawsuit Loans

If you are injured in any type of accident, you might struggle financially, especially if you cannot work while you recover. Unfortunately, this causes some victims to settle their personal injury claim too early, resulting in less compensation than they deserve.

However, there is a solution out there for those victims who can’t afford to wait for their settlement or judgment. Lawsuit loans, pre-settlement loans or litigation funding are a new option for personal injury plaintiffs to get the money they need while they fight their case. If you are considering a lawsuit loan for your case, here is what you need to know and how to apply.

What is a Lawsuit Loan?

A lawsuit loan is a cash advance that lenders give to plaintiffs in exchange for a portion of their potential settlement amount. Unlike traditional loans, lawsuit loans are non-recourse and don’t require repayment if the plaintiff loses the case. However, they usually carry a high interest rate, which is comparable to the interest rate of payday loans. Interest rates range anywhere from 27% to 60% compounded monthly.

How to Apply

Since lawsuit loans aren’t regulated by the same rules as traditional lending, they are easy to apply for. Here are the steps you can take to make the application process as smooth as possible.

1: Discuss Your Need for a Lawsuit Loan With Your Lawyer

Before you apply for any funding, talk to your lawyer about your financial situation. They have potential resources to help you out and information about your financial struggle might strengthen your case. Most importantly, your lawyer knows the potential value of your settlement, so they can tell you how much funding you could apply for.

2: Determine How Much Money You Need

Plaintiffs use lawsuit loans for a variety of expenses, including rent, food, utilities, and more. Make sure to itemize your expenses for every day that you are in recovery and cannot work. Again, keep in mind that lawsuit loans have high interest rates, so it’s best to only borrow what you need.

For example, if you borrow $20,000 at an interest rate of 40% and settle your case in 12 months, you owe the lender $20,000 plus $8,000 in accrued interest. The longer your case takes to resolve, the more you will owe.

3: Look for a Reputable Lender

In the United States, there are few regulations for lawsuit loan lenders. As a result, there are several companies that try to take advantage of desperate plaintiffs by charging egregious fees and interest rates. Only accept funding from a company that explains their fees and interest rates upfront and provides you with a payment schedule.

4: Apply for Funding

Once you find a reputable company, submit an application for funding. Lawsuit loan lenders don’t require a credit check, employment verification, or proof of income. Also, make sure that you give the lender accurate contact information for your lawyer. The faster the lender receives your case file, the quicker they process your application.

Some Final Thoughts on Lawsuit Loans

Filing a lawsuit is an expensive process for many personal injury plaintiffs, especially if their accident involves serious injuries. However, lawsuit loans help ease the financial burden on plaintiffs at risk of losing their assets while trying to resolve their case. If you are close to reaching a settlement or you have a high-valued case, a lawsuit loan may be the best option to keep you financially stable.

Keep up with the top stories from Reader’s Digest by subscribing to our weekly newsletter.