In the US lawsuits have become a common feature. Most cases are brought before the civil courts. Plaintiffs before these courts often attempt to get compensated for various actions against them. It could be personal injury or wrongful death among other reasons.
We have often seen advertisements of different institutions offering lawsuit settlement loans. To those that aren’t involved in lawsuits, these loans seem obscure but to the majority with pending cases, these loans are a chance for financial relief. This article informs you of everything you need to know about lawsuit settlement loans.
What is a lawsuit settlement loan?
Civil lawsuits take ages to get resolved, and when you have a pending case in court, your bills still need to be paid. A lawsuit settlement loan is cash borrowed by a plaintiff to fund his legal case and other financial needs pending settlement of the case. The money together with interest and other fees is repaid to the lender from the plaintiff’s recovery once the verdict is reached.
For example, if you are a victim in an auto accident and have sued for compensation, you have mortgage payments, medical bills, attorney fees and other financial burdens. To stay financially solvent, you take a lawsuit settlement loan which you’ll repay once your case is settled and you’re compensated.
How are lawsuit settlement loans different from other loans?
Apart from the fact that these loans are exclusively offered to plaintiffs in civil cases, lawsuit settlement loans are non-recourse loans. This means that unless the borrower wins the case, the lender cannot recover his money. If you lose the case, and you have taken out the loan, you owe no debt to the lender. If your settlement amount is lesser than the loan, your liability ends with what you can pay from the compensation you receive.
Secondly, these loans also come with higher interest rates compared to other loans. This is due to the no-risk lending option the loans come with. With the lenders putting too much at stake, lawsuit settlement loans usually have interest rates ranging from 3% to 8% per month.
Finally, there is no specific loan amount for these lawsuit settlement loans like in other loan offers. Usually, lawsuit settlement loans are 10% of what a plaintiff would recover in case they are compensated from the suit.
What claims qualify to apply for a lawsuit settlement loan?
Civil lawsuits can be for various reasons; therefore, not all claims qualify one to receive a lawsuit settlement loan. The claims that are eligible for these loans include slip and fall, medical malpractice, wrongful death, product liability and auto accidents among others. Lenders before dishing the loans analyze the details of your case.
What should you consider before applying for a lawsuit settlement loan?
This loan is a financial decision, and the deciding to apply for one should never be made in impulse. There are some factors you should always consider before getting a lawsuit settlement loan. Look at your chances of succeeding in your case. Weigh the amount of settlement you’d recover in case you go into trial with the amount offered by the defendants as the settlement to dismiss the case. This will help you decide if taking the loan and going through with the trial is worth it.
Also study different offers given by various lenders. Different lenders in their loan offers charge different fees, interest rates and have different applicant requirements. Shop around to get an offer suitable to you.
If you or a friend are involved in a suit and have financial burdens, share this information with them. Lawsuit settlement loans are a financial relief option. Furthermore, they enable you to get the settlement you deserve instead of bogus low settlement given by defendants. However, it’s best to make an informed decision before applying for a lawsuit settlement loan.