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This content is for informational purposes only and is not intended to provide legal or financial advice.
Some people think that lawsuits are frivolous, but dealing with a suit can be overwhelming. Having to deal with being sued and the associated legal fees can cause anyone to feel fate has dealt them a bad hand. A lawsuit loan may alleviate the stress of this situation by helping a person manage the cost of their suit.
What Are Lawsuit Loans?
Lawsuit loans are offered by legal funding companies. A lawsuit funding company buys your right to all your damages and costs upfront. This company then sells that right to the highest bidder, usually an investor or hedge fund. They are not the same as personal loans. It is a lawsuit purchase, not a personal loan.
Lawsuit loans are a financing source for lawsuits, not private loans. The idea is that a person can borrow against the settlement proceeds at an interest rate and then use this money to pay off the final settlement amount.
Consider All Your Options
Before you decide to borrow against your lawsuit, you should evaluate all your other options first. If you have previously taken out personal loans, it may be a good idea to consider them before seeking another type of personal loan. Compare the interest and terms of different deals.
To get a pre-settlement funding loan, you must have an open lawsuit. Most pre-settlement funding companies can help you with your current legal matter if it is in your favor.
Negotiate With Your Creditors
Even if you decide to pursue a lawsuit loan, you should try to work out a settlement with your creditors first. If the lawsuit loans being offered are higher than what the creditor is willing to negotiate, you may be better off working something out with them before taking on more debt. It would help if you also tried to negotiate a lower settlement amount.
Qualifications Required to Receive a Lawsuit Loan
Lawsuit loans are available to the general public. You don’t need to be wealthy or have good credit to qualify for one. The most important thing is how your case will hold up in court. Your attorney will be able to tell you this and should be able to advise you about lawsuit loans if your case has a strong chance of succeeding in court.
If you file a personal injury lawsuit, this may qualify you for a lawsuit loan since these cases usually bring in more money than other types of lawsuits.
Ask Your Attorney About Legal Funding Companies
Always ask your attorney if there are any legal funding companies that they recommend. A reputable company will have a long track record of providing financing for lawsuits.
You may also consider asking a friend or family member who has gone through a case in the past if they have used this type of financing. If you can’t get funding from an outside source, some law firms have legal funding departments that can help you with your lawsuit.
Ask Specific Questions About Fees and Interest Rates
Be sure you know all the information about a lawsuit loan before signing on the dotted line. Ask questions about what your monthly payments and interest rates will be. Knowing the amount of money you owe, including interest, will help you when it comes time to make payments on your lawsuit loan down the road.
In addition, it is a good idea to carefully review any signed documents to ensure there are no hidden fees or fine print that could hurt your case in court.
A Lawsuit Loan Might Be the Answer You Are Looking For
A lawsuit loan is a cash advance that allows a plaintiff to access funds for their lawsuit. Since plaintiffs cannot guarantee future settlement proceeds, companies can be selective of the cases they accept to fund. If you have a strong case against the defendant, you are more likely to qualify for this type of legal funding.
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