SETTLEMENT LOANS –
HOW TO GET A SETTLEMENT CASH ADVANCE
Overview of Settlement Loans
Settlement loans, also called pre-settlement lawsuit funding, or legal finance, are ways to help litigants waiting on their lawsuit to settle to meet temporary cash needs. Different companies offer funding on different types of lawsuits.
There are two types of settlement loans – recourse and non-recourse. In non-recourse, if you do not win your suit, you do not owe any money. In recourse funding, you will have to repay the amount you are advanced, plus interest, even if you lose your lawsuit.
Reasons to Get a Settlement Loan
Personal injury and other types of settlements can take a long time. Bills and monthly expenses don’t slow up. Insurance companies and other defendants know it may be hard for you to wait them out and that you might accept a lower settlement due to financial hardship. These funds can be used to help pay medical and living expenses while waiting for your settlement.
The insurance company, or other defendant, will not know or be notified that you have been advanced funds. And, if you take a smaller amount initially than you may be eligible for, you may be able to get more funds later if the settlement is dragging on.
The Way Settlement Loans Work
Settlement funding companies will advance funds on many different types of lawsuits.
Some firms charge application fees, while others do not. A credit check or credit approval is not required unless you have a pending bankruptcy.
You do not have to consult your attorney before applying for funds. The agreement to accept funds will not affect your agreement with your attorney or lower the fees they are entitled to.
The Details of Settlement Loans
This may sound unusual, but borrowing money based on your claim or selling a portion of your settlement is legal. Out of the funds you receive, legal fees and medical liens come out first, but after that, the remainder is yours to do with whatever you want. Not all lenders operate in all 50 states, so you may need to check to ensure the lender you are considering does business in your state.
Settlement Loans Amounts Available
These types of settlement loans can advance you anywhere from $500 up to $1,000,000 depending on your case. For cases that are expected to take a while to settle, monthly payouts to help cover your ongoing living expenses can be arranged.
Getting Settlement Loans Quickly
For lower amounts, $500-$1,000, decisions can be made within 24 hours or sooner. It usually takes 2-3 days for amounts up to $5,000, but for amounts greater than that, it will take a little longer. For a significant amount, the company will have your case file reviewed by their own attorneys.
Alternatives to Settlement Loans
Traditional lenders, such as banks, will not loan money based on a potential lawsuit settlement, even one backed by an extremely solid case. They consider it to be too risky. Of course, interest-free loans from family may be better. Credit card advances may tide you over, but the interest rates are high.
Both non-recourse and recourse funding involve interest payments and the rates vary, but if your cards and family are maxed out, this may be a good way to keep yourself afloat while waiting on your settlement.
Your attorney is not allowed to loan you any money while your case is being litigated or settled, either. This is a rule of the American Bar Association and exists to protect you. If your attorney is owed legal fees and expenses and loans you cash on top of this, they might be tempted to accept a quicker settlement to get repaid instead of waiting on the amount you deserve.
Types of Cases for Settlement Loans
Many different types of cases may qualify for a settlement loan.
Medical suits such as: asbestos, pharmaceutical claims (such as fen-phen, zyprexa, vioxx, etc), medical malpractice, mesothelioma, nursing home malpractice or primary pulmonary hypertension (PPH) suits.
Accidents suits such as: auto accidents, aviation accidents, construction negligence, FELA (railroad), Jones Act (maritime), motor vehicle and passenger injury, pedestrian injury, personal injury, premises negligence, slip-and-fall, trucking accidents and wrongful death.
Civil suits such as: breach of contract, civil rights, class action lawsuits, commercial litigation, copyright or other intellectual property litigation, divorce, employment discrimination, environmental litigation, fraud, general negligence, inheritance, legal malpractice, litigation funding, mass tort, product liability, securities fraud, sexual harassment, whistle blower (qui tam), workers compensation, wrongful termination, as well as others.
Non-Recourse Settlement Loans
Some settlement companies are effectively buying a piece of your lawsuit settlement from you by advancing you the money you need. If your lawsuit doesn’t result in any funds, you don’t owe the company any money. They are basically betting you will win and giving you money based on the merit of your case expecting to get a percentage of your settlement when it comes in. The limit to the cash advance you can get is typically 10-15% of your anticipated settlement amount.
Recourse Settlement Loans
Other types of settlement companies simply loan you funds based on the merit of your lawsuit and require repayment of the amount in a certain amount of time with additional funds, interest, to be repaid with the principal.