A lot of plaintiffs, especially injured plaintiffs, find themselves in the midst of a trial and dire need of cash. Are you in this situation? Are you thinking of applying for a lawsuit loan to survive until your settlement? Read on to find out the pros and cons of a lawsuit loan are before you decide!
Many people face the option of borrowing money against the settlement they expect. According to experts, this lawsuit funding is known as lawsuit cash advances or loans on lawsuit.
It can be expensive and time-consuming to file a lawsuit. If you have suffered from an injury, you might be faced with mounting medical bills or have become unemployed, and your financial situation may exacerbate before you settle your case or win it. A lawsuit loan purchases your right to all or part of your settlement. In exchange, you get an advance to cover your medical costs and costs of living, including rent and bills, pending the case.
Lawsuit Loans – Pros
For those who fail to obtain a conventional bank loan, a lawsuit loan can be a lifeline. If you are hoping the settlement will provide funding or cover your needs, getting a legal action loan may make it possible for you to bide your time looking at settlement offers. You shouldn’t prolong the case – your ultimate aim should be getting justice. If you get a lawsuit loan, this will ease the financial burden, and you and your lawyer will have more time to negotiate or go to trial.
Lawsuit Loans – Cons
Lawsuit loans can be expensive. You will owe the lender more than twice what you borrowed plus interest, (but never more than your settlement or award). What’s more, personal injury cases can take years to make it into a court of law. The interest rates on a conventional lawsuit loan can reach 55% a year, almost as much as a payday loan, and lawsuit loans are just as unregulated. You can imagine how much it would cost if your case dragged on for, say, three years!
You could consider other resources as an alternative, such as disability payments, proceeds from your insurance company, a loan from a credit union or even a wealthy friend or relative.
Your case might not qualify for a lawsuit loan. Apparently, a lender will only lend, if he’s sure he will get his money back with interest. You don’t pay the loan back if you lose. You also don’t have to repay the full amount if you win less than the lender expected. You might have to go to several lenders before you finally find one who is willing to give you a loan.
As mentioned, lawsuit loans are relatively unregulated, because they aren’t considered loans in the sense that car loans and mortgages are. There are few limitations on how much lenders can charge for their services, and they are practically not required to disclose interest rates and other terms. This choice makes it hard to compare and contrast prices or find the information you need to make the right decision.