Pre-settlement loans are one of the current top stories in the litigation sector. To the layman, this term seems a bit unfamiliar and unconventional. Yet, some individuals with the scars of litigation will enjoy this financing method.
What Is a Pre-Settlement Lawsuit Loan?
Pre-settlement lawsuit loan is a funding system given to accident victims or plaintiffs. It helps to remove the financial burden of everyday life while they await the case. For example, the victims can pay for their food, medical checkups, rent, and other financial settlements with this loan.
If the lawsuit is successful and the victims get compensation, they get to pay back the loan acquired. However, if they are unsuccessful, they are not under duress to pay back the loan to the lawsuit loan company.
How Pre-Settlement Lawsuit Loan Works
A lawsuit must undergo a filing process before a lawsuit loan is obtainable. After the filing process, you are to fill out a form for the loan you desire from the lending company. The lending company will then analyze your case by contacting your lawyer. This analysis is essential as the lending company will not get a refund of the loan if you lose the case.
Companies like US Claims, Thrivest Link, Bridgeway Legal Funding, Provident Lawsuit Loans, and many others conduct thorough investigations of these matters. After the investigation, the company will provide worthy applicants with the funds they need to get through the litigation process.
Note: When acquiring a lawsuit loan, you will not have access to the entire amount of money you borrowed. Here, your lawyer gets a third of the acquired loan. You also get some medical allowances and a fraction of the money they believe you will receive if you win.
After approval, there is the signing of the documents. After this, you receive a credit alert immediately. This loan money availability is within 24 to 48 hours.
After the lawsuit procedures are over and you recover some monetary proceeds, you must pay back the loan. These proceeds could come through judgment or the settlement by a mediator. Either way, you must pay back the initial loan amount plus the interest and other extra fees.
Benefits of Lawsuit Settlement Loan
There are many advantages of a lawsuit settlement loan. They are;
A decent settlement loan is free of risks. However, in case you don’t regain the money from your litigation process, you are not mandated to pay the loan. Therefore, this course makes lawsuit loans different from conventional loans. These conventional loans demand you pay back the loan no matter the turn of events.
Extra Time for the Negotiation Process
A pre-settlement loan extends the time for a personal injury victim to negotiate. Before this, personal injury lawsuits reach a quick settlement due to the deficiency of finances. However, these lawsuits cannot continue as the litigation fees keep piling up.
Sadly, a tutored defendant who knows the victim’s frail stand will give an underrating offer. He does this to box the plaintiff, seeing there is no financial willpower, and would likely succumb. However, a lawsuit settlement loan will turn the tides and support the plaintiff’s bargaining position. Thus, the plaintiff can reject substandard offers because the financial bills do not pose a threat.
One of the most significant benefits of a lawsuit loan is immediately crediting the funds into your account. After an accident, there is a stockpile of litigation and hospital bills. These bills trail the personal injury victims and create a weighty financial load. Plus, this injury could cause psychological trauma and wreck their relationship with others.
To make things worse, this victim could be without a stable job and is in financial tension. With all these scenarios, a pre-settlement loan is a sigh of relief to such a victim.
The Ugly Side of Lawsuit Loans
With the advantages come the disadvantages of lawsuit loans. Some of which are;
Loans like mortgage loans, student loans, and credit cards are placed under a checking system. This synchronizing system involves the state and federal government agencies. These agencies check for the following:
- The quality and quantity of information to be on display.
- The rate of interest a lending company can charge.
In essence, these lawsuit loans do not operate with standard interest rates. As such, the rates can be outrageous, often exceeding 100% per year. Also, the terms and conditions of these peculiar loans can be uncertain and seem deceptive. To avoid this uncertainty, ask the lender to provide a concise and clear loan term.
Pre-settlement Loan Can Be Cost Intensive
Lawsuit loans have a high cost associated with them. The cost might be why individuals shy away from acquiring this type of loan. The high price is because if the plaintiff does not settle or win the case, he does not refund the money back to the lending company. It’s a high-risk, high-reward loan from the side of the lender.
With this possibility, these companies will have to add interest and application fees. This will ensure they get handsome profit from the whole process.
You Might Not Be Eligible
Another ugly side of the acquisition of pre-settlement loans is the probability of not qualifying for it. The lending company will critically analyze the case for the plaintiff’s eligibility for the loan. They observe the chances of success, and if the possibility seems low, the plaintiff will not get the loan. No company would like to run on a loss.
Making Things Simple
Pre-settlement loans are in place to relieve financial tension. But, it could also be problematic if you don’t take note of the following:
- You need to choose the lending company carefully. You need the help of your lawyer to pick the appropriate one.
- Mind the interest rates. Also, be sure to check if the interest is compoundable.
- The cost of application.
- Observe the clarity of the terms and conditions associated with the lawsuit loan.
A pre-settlement loan is a fast and easy lawsuit loan. This loan enables you to carry out any litigation proceeding without financial tension. It has certain advantages like; little to no risk, fast funding, and the leverage to negotiate more. But, it also has its disadvantages: high cost, the tendency not to qualify, and no clear regulations.