Personal injury victims are often left struggling with the cost of everyday living. Even though they are entitled to a financial settlement, waiting months or years to receive their funds can add too much stress.
Legal funding, or pre-settlement loans, can help plaintiffs overcome these financial hurdles. However, before you apply for this type of funding, you should consider several factors.
They are non-recourse loans
While the term “loan” is commonly used to describe personal injury legal funding, it is crucial to understand that this type of financing is not technically a loan. Instead, it is a financial agreement between a funding company and a plaintiff in which the plaintiff exchanges immediate cash for a percentage of future proceeds. These agreements are also known as lawsuit loans or litigation financing.
Many accident victims must take out a non-recourse pre-settlement loan to stay solvent until their case is resolved. If they don’t have enough money, they may be pressured to accept a low-ball offer from their insurance company.
Unlike traditional bank loans, which are often based on credit scores and debt-to-income ratios, legal funding companies rely on the strength of your legal claim to evaluate whether you qualify for a non-recourse advance. The funding process is fast and straightforward; you can usually apply online.
The terms of a non-recourse lawsuit funding advance can vary from provider to provider. Still, most include a clause that states that the lending company has no control over the ultimate disposition of the plaintiff’s case. It helps protect borrowers from having their settlement advances canceled if the funding company disagrees with the outcome of their case.
They are risk-free
The litigation process for personal injury cases can be extended. Injured plaintiffs may struggle to pay bills and maintain financial stability. As a result, many turn to lawsuit loans to stay afloat during the process. Whether it is medical bills, car payments, or rent, these advances can help them manage their finances while waiting for the outcome of their case. But are lawsuit loans risk-free?
Lawsuit funding (pre-settlement funding) provides cash advances against the anticipated settlement or verdict in an accident or personal injury case. Unlike traditional loans, these transactions are not based on the borrower’s credit score or current income. Legal funders assess based on the merits of a plaintiff’s case. Moreover, there are no monthly payments or interest on the lawsuit advance.
The approval process for legal funding varies depending on many factors, including the case venue, the attorney’s reputation, insurance coverage, medical records, and other evidence. However, most legal funding companies do not require a high credit score or employment verification. Moreover, most of these loans are non-recourse and offer fast approvals. It makes them ideal for injured individuals needing immediate money to manage their finances and resist the pressure to accept a lower insurance company settlement.
They are easy to apply for
Personal injury loans, or lawsuit financing, are non-recourse loans that provide injury victims with a portion of their early settlement. They are easy to obtain, and unlike traditional loans, they do not require an income source or credit history. They are also often available for cases with a high probability of winning.
Personal injuries can be financially devastating, and many plaintiffs cannot meet their bills with their current income. It is especially true for those whose injuries resulted in protracted legal battles, as the insurance companies tend to drag their cases out, hoping injured parties will become desperate and accept lower offers than they deserve. Fortunately, pre-settlement funding can help injury victims stay solvent during their lengthy litigations by providing them with the financial support they need to pay their bills and avoid bankruptcy.
While critics are entitled to their opinions, it is essential to note that personal injury loans serve a genuine need in the marketplace. Plaintiffs face enormous pressure to settle their cases because they are saddled with medical bills and lost wages. It puts them at a disadvantage when they take on powerful insurance companies that have teams of defense lawyers. Lawsuit funding companies can offer these loans because they focus on the merits of the case and the likelihood of winning.
They are free
The process of applying for a personal injury loan is usually free. However, if you are approved for the loan, an interest rate will be charged depending on your strong case and credit history. Some companies also require a guarantee from your lawyer to ensure repayment of the funds. Despite the cost of these loans, they can help you avoid financial hardship and stress during your lawsuit.
Many injured people cannot meet their financial obligations after an accident. Often, this is due to an inability to work and accumulating medical bills. The cost of these expenses can quickly become overwhelming, especially when a person is dealing with physical and emotional trauma. This is why personal injury lawsuit funding can be so beneficial for those in need of financial assistance.
Personal injury lawsuit funding, or pre-settlement funding, is a financial agreement between a legal funding company and an injured plaintiff that exchanges immediate cash for a portion of the future proceeds of the claim. Although this type of funding is regulated in some states, it is still controversial. Some critics say the financial industry exploits victims and profits from their pain and suffering. Others argue that the funding companies provide liquidity to an illiquid potential asset.