Pre-settlement loans are advances of cash given to plaintiffs in personal injury cases with the condition that the principal and interest be returned from any subsequent settlements or judgments. The settlement or verdict money are typically seized by the creditor as collateral, and they sometimes carry a high (sometimes even predatory) rate of interest.
Pre-settlement loans are also known as lawsuit funding options include litigation funding, pre-settlement money, lawsuit loans, and lawsuit cash advances. These loans are accessible in various different sorts of disputes, including personal injury lawsuits including car accidents, medical malpractice, product liability, and wrongful death. Read on to learn more and contact Law Offices of Fernando D. Vargas at 909-982-0707 if you require a free legal consultation.
Who can get a pre-settlement lawsuit loan?
After filing a lawsuit, you are given lawsuit financing with the intention of reaching a settlement or succeeding in court. Although each pre-settlement funding organization has its own unique requirements, in general all plaintiffs or claimants are qualified to apply for a loan as long as their personal injury claim is legitimate.
Keep in mind that if you request for a loan, many legal funding organizations do not require items like credit inquiries, requests for credit scores, or employment verification. If you qualify for a loan, you will likely receive a lawsuit cash advance within a few days.
How does pre-settlement funding work?
After reviewing your application, the lawsuit funding firm will determine how much you might win in court or how much it might settle for. You will receive a pre-settlement cash advance if the company authorizes your loan. In exchange, you consent to repay the lender the advance you received (commonly referred to as the “principal”) and a funding fee from your anticipated settlement funds or jury/court award.
Typically, you are not required to make any payments (such as monthly payments) until your matter settles, or you win in court.
Your settlement will typically be subject to a lien from the creditor, which means you are pledging it as security. Before distributing your share of the settlement cash, your lawyer is required to satisfy all liens when they receive the settlement funds.
Many litigation finance organizations will give plaintiffs advances of 10% to 15% of their anticipated settlement sums. Therefore, for example, if your case is projected to settle for $100,000, you might obtain a loan in the amount of $10,000 to $15,000.
What can you buy with the loan money?
Keep in mind that once you get a loan, there usually are not many limitations on what you can do with the money. Many claimants use the funds to pay for living costs, health care costs, tuition, auto repairs (particularly in cases of auto accidents), and credit card debt.
How much do the loans cost?
You must pay the loan firm the principal that it advanced to you, plus a funding fee when your ongoing litigation is resolved or you prevail in court. For the latter, the funding cost is often a loan’s interest rate, which varies from loan company to loan company. Having said that, many borrowers might anticipate paying an annual interest rate of 40% on a loan.
Be aware that unscrupulous lenders may attempt to charge you an excessive interest rate on your loan. If you think the rate is excessive, you should see a lawyer or law firm for advice.
What happens if you lose your case?
You typically are not required to repay your loan if you launch a lawsuit, fail to reach a settlement, or lose in court. Since the funding business takes on the risk of a loss, the loan is regarded as being risk-free in this sense.
Please be aware that one of the factors contributing to these loans’ significantly higher interest rates than more conventional loans is the assumption of risk.
If you have been injured in an accident and require legal assistance, Law Offices of Fernando D. Vargas is here to help. Contact us now at 909-982-0707 to request a free legal consultation.
