Whenever a plaintiff gets denied a settlement loan, they start to say bad things about it. But when you ask the plaintiff who got the settlement loans when they needed the money most during a pending lawsuit, they are all praised for it. Settlement loans generally work in the favor of the plaintiff. In a few cases, people may have experienced bad services from a pre-settlement funding company, leading to negative sentiment for these cash advances.
Anyone who has a pending court case and needs cash to cover the litigation expenses looks for ways to get funds for a lawsuit. A settlement loan is one quick and risk-free option available for the plaintiff. Making a good decision while taking any form of cash advance is a must. We understand that many plaintiffs may have genuine questions: Are settlement loans bad? What kind of effect can it have overall?
Since our company has been offering pre-settlement funding for more than a decade, we understand every in and out of settlement loan. Here, we are trying to answer your question as best as possible. So, let’s begin with understanding what settlement loans are.
What Is a Settlement Loan?
Settlement loans, as the term suggests, are like a cash advance that is offered against your settlement. It is nothing like a traditional bank loan but a financial solution designed for the plaintiff who is willing to get funds right now in exchange for their future settlement award. Settlement loans or settlement funding are the same, both having the characteristics of a loan but not an actual loan.
It is more like cash provided to you right now in exchange for what you will get from your lawsuit settlement. These cash advances are, in fact risk free, since you only have to repay the amount if you win, and if you lose, you will owe nothing to the lending company. Here, you don’t have to show any credit rating or employment status, your pending lawsuit will act as the collateral. You will get settlement loan based on the strength of your case only.
Unlike a bank loan, you don’t have any monthly repayment plan; the payment is only required once you win the case. Even the attorney is going to get involved in a settlement loan, so you can relax that the legal agreement will be taken care of by your attorney. To understand more about it, check settlement loans in detail.
Why Settlement Loans Are Not Bad?
As of now, you understand settlement loans and their features. Now, you must know if they are bad for you or not. In our past history of financing lawsuits, we have seen no plaintiff complaining about settlement loans, at least in our client experience.
A settlement loan is not available to everyone. Only people with a pending lawsuit that is strong enough to win a settlement can get a cash advance. The lending company never approves a settlement loan to a plaintiff whose case is weak, and the merits of the case are poor. Lending companies will face all the risks of losing money if they fund lawsuits that are not going to win.
Further, a settlement loan is only possible if your attorney consents to a cash advance. If your attorney sees potential in your case and understands your financial stress, they can explain pre-settlement funding to you. In fact, many attorneys also take attorney funding if they have a lot of cases pending in court and need financial backup to run their law firm and practice. You can rest assured that if any settlement funding provider has hidden terms, the attorney will definitely inform you so that you can make the right decision.
Getting a settlement loan is easy, and with no restriction on how you spend, it will definitely provide you peace of mind. You can use the cash advance to pay for medical bills and cover litigation expenses. Also, you can use the money to cover your daily expenses, such as bill payments, rent, and others. Being such a lucrative option for the plaintiff, a doubt in mind is obvious. However, as we have seen the assistance it offers to the plaintiff when they are in need of money, we can say that settlement loans are not bad.
Yes, one disadvantage of a settlement loan is its interest rate. Since it is a risk-free option for the plaintiff, and the lending company is completely exposed to the risk, the interest rate on these cash advances will be high.
Who Can Get Settlement Loans?
The very obvious answer is that people who have a pending lawsuit are eligible for a cash advance. However, there are a few requirements that you need to meet to get a loan while you are awaiting settlement. Let’s check those criteria.
- You have a pending lawsuit
- Your case is strong and winnable
- Your age is above 18
- An attorney is representing you in court
- Your attorney agrees to pre-settlement funding
- Your attorney must be working on a contingency fee.
Cases On Which You Can Get Pre-settlement Funding Are:
- FELA cases,
- labor law cases,
- commercial lawsuit cases,
- racial discrimination cases,
- personal injury case
- car accident case, and
other legal cases are entitled to apply for a pre-settlement loan.
What if You Lose The Case After Taking Settlement Funding?
Plaintiffs often consider what will happen if they lose the case against which they are seeking settlement funding. You can relax. Even if you lose the case, you don’t need to repay anything to the lending company. Generally, pre-settlement funding companies provide non-recourse financing options, at least we do. We only ask for repayment if you win the case. Also, you don’t need to make any monthly payment; you can directly repay the complete amount (loan amount + interest) once you win the case.
A settlement loan will not negatively impact your finances; it is not a debt that you can’t repay since your future settlement will cover the expenses of the settlement loan. Also, you don’t have to worry if you take too much settlement loan, but the actual settlement amount you get is less than that, and you have to pay from your pocket. It is not going to happen since we only provide up to 20% of your future expected settlement information or settlement loan.
So, if you have a pending court case and need cash to pay for the legal battle or pay for your medical needs, a settlement loan is the best option for you.