The procedure for filing personal injury claims can be very slow. The bills might begin to mount up after an incident. Also, insurance adjusters may take months or even years to settle a claim. As such, waiting for a lawsuit settlement check can be challenging for a victim of an injury.
So what should one do while waiting for this prolonged settlement check? It’s time for provident lawsuit loans that can stand in for the moment.
But how do they work? How do you become qualified for it? How should you go about it? And is it even a good idea? These are all things you should know about lawsuit loans. So read on to discover more.
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What Is a Pre-Settlement Fund?
There are so many other names that pre-settlement funding goes by. For example, some refer to it as a lawsuit loan, car accident loan, or personal injury loan.
These many names all measure up to the same thing for clients. It is a fund offered to those seeking legal redress in specific cases.
Legal loans are there for those looking for money to cover losses due to injuries resulting from an incident that was someone else’s fault. The funding comes from the settlement or verdict proceeds.
In essence, you can get cash right away without having to pay it back. So for upcoming court rulings or settlements, you can already receive funds.
How Pre-Settlement Funding Works?
A legal funding firm will give a part of the expected claims to the plaintiff. The claimant, in turn, assigns a part of the recovery to the funding firm. This avoids waiting until the case settles or goes to trial.
As you can already guess, trials can sometimes take months or years with a high dollar payout. As such, you will get a lump sum payout, which you can use to pay off debt. It can also act as a safety net while you get ready to return to the workforce.
The good thing about it is that there is nothing to repay if you do not win your case. Although people call it a lawsuit loan, you should know that it is a share of the settlement funds you might get.
Also, the money is a non-recourse, implying that the firm cannot ask for a pay back if you do not win the case.
Pre-settlement funding is the lowest cost because the funder gets less after your case. You also don’t have to pay back if you lose your case. Of course, other lending firms will give you such a loan.
Your trial award serves to pay back the funding. Thus, the size of the cash you receive will depend on how much the legal loan firm owes in payback.
What You Should Know About Personal Injury Loan?
Now you know what pre-settlement funding is and how it works. So, it’s time to consider the vital things you must keep in mind about lawsuit loans.
Interest Rate Matters
One of the most overstated topics clients must deal with is the interest rate for lawsuit loans. To begin with, many lawsuit funding brokers make false promises that they will offer you the lowest interest rates possible.
It all comes down to marketing to make you apply with them rather than a legit legal funding provider. They know that you will believe your lawsuit loan will have a low-interest rate since you believe your case is strong.
No matter the nature of your case, it must be a lawsuit loan from a licensed lender. So, you must keep three things in mind about the interest rate on lawsuit loans. They are:
- Only direct lawsuit funders can know the interest rate you pay. Broker firms claim to be on the merits of your personal injury claim in their advertising. But it’s a deceitful plot.
- You can’t estimate how much the legal funding will cost you from interest rates alone. The legal funding fees are the most crucial part. This is true for firms that add compound interest to their rates.
- There may also be a variety of fees associated with legal funding loans. So look for a lender who can lower or waive some of these costs. By working with a direct lawsuit lender, for instance, you can avoid several of the fees. These are fees that standard brokers always demand.
Although the fee will vary depending on your case’s risk, you should always receive a fair price.
But the first warning sign of a potential scam is if a funder refuses to provide you with an estimated rate. So, it is crucial to know how the legal funding firm calculates its compound interest rates.
It Takes No Time to Process
In a time of pain after an accident, the claimants need money to survive. As a result, processing the funds shouldn’t take much longer.
So once you get your request for a car accident loan approved, receiving your money shouldn’t take more than 24 hours. You also choose how you want to get your money; it may be a bank deposit or check.
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Qualifications for Pre-Settlement Funding
Of course, you can’t just get a settlement loan. There are specific things that qualify you for these legal loans.
Below are a few factors that make you eligible for a lawsuit that you must know about.
- The Type of Case
Many cases receive pre-settlement legal funding from different firms, but this does not imply that they can help with every court case funding.
There are numerous lists of eligible cases. But they must relate to personal injury law so you can still qualify.
- Have an Attorney
You must also have legal counsel when engaging in settlement talks to qualify for legal settlement loans. By doing so, you can prove your sincerity, the validity, and the worth of your claim. It also shows the possibility that you will receive a settlement after the lawsuit is over.
The lending firm works closely with your lawyer before and during the loan term. As a result, they can determine your potential settlement amount and create a funding plan that suits your cases.
Recent research shows that clients with an attorney receive 3.5 times their settlement. That alone should tell you what it means to have an attorney for your legal loan application.
- Be At the Right Place
Sadly, some states have more lenient legal funding policies than others. As such, it may affect your ability to get a lawsuit loan. Although it works in every state in the US, various state restrictions make it tedious for lawsuit funding firms.
So before considering legal funding as a possibility in your case, make sure your state permits it.
Accidents happen in everyday life, and they cause serious injuries or loss. As a result, you can find yourself in a situation where you need money to cover various unforeseen damages, including medical expenses.
You can also find it challenging to pay your daily bills like rent, utilities, and groceries until your lawsuit goes to trial.
From the points listed above, you should have in mind the basic things about legal loans. Since you now have the needed information, go ahead to take the legal settlement loan; it is the lowest-cost funding.