Going to court costs money, whether you’re filing a lawsuit or defending yourself. Here’s a closer look at lawsuit loans and eligibility.
About 97% of civil cases settle before they go to trial.
If you’re involved in a civil lawsuit, this could seem like good news because you can get your settlement check sooner rather than later. That’s not quite how it works.
It can still take years for you to receive a settlement check. What can you do if you’re depending on that money to pay your bills? The lending industry has come up with lawsuit loans to help.
Keep reading to find out what lawsuit loans are and how you can get one.
Lawsuit Loan Basics
What exactly is a lawsuit loan? It’s a loan that you can get if you’re in the middle of a lawsuit and you expect to win a financial settlement. These types of loans go by many different names, such as settlement loans, lawsuit loans, and pre-settlement loans.
What often happens in these cases is that lawsuits take forever to settle and get a check in your hands. In the meantime, you have financial issues because you can’t work or you have bills associated with the lawsuit that need to get paid.
A lawsuit loan can help you cover your bills before you get your settlement check. You then repay the lawsuit loan out of your check.
Do You Pay A Lawsuit Loan Back If You Lose?
This is the million-dollar question. The answer depends on your lender and the terms of your loan. In other words, know what you’re signing up for before you accept the loan.
There are some lenders that say that if the case is lost, you don’t need to repay the loan. Some lenders have fine print that will charge you a high amount of interest even if you lose, so you do need to tread carefully.
That being said, can be a lifesaver for many people who financially stuck. Many lenders know this and set up scams to take advantage of the situation.
Getting Lawsuits Loans
Are you ready to learn how to get a lawsuit settlement loan? Here are the things that you need to know.
The first thing is to have a conversation with your attorney. They do need to be involved because your lender will want to review the specifics of your case before they approve your lawsuit loan.
Your attorney may also provide suggestions and recommendations for lenders. Have a talk with them and let them know where you are financially. They’ll let you know if a lawsuit loan is the best fit for your situation.
Create a Budget
If you and your attorney think that a lawsuit loan is the best option for you, then you need to figure out exactly how much you need. Create a budget for yourself that will allow you to pay for your basic expenses and have enough to last until your settlement arrives.
It’s important to decide exactly what your settlement loan will pay for and stick to that plan. If you go over your budget, you could run the risk of running out of money before the settlement comes in.
You should talk to your attorney to find out how much of your settlement will be left over after you pay your attorney and repay the loan. You don’t want to plan to have extra money after the settlement to find out that there’s nothing left.
Find a Lawsuit Loan Lender
Your attorney may know some settlement funding companies. You want to vet them on your own to make sure that you’re working with a legitimate lender.
Legitimate lenders want to talk to your attorney. They want to take a close look at your case and work with your lawyer to get documents and details about your case.
Lenders that don’t want you to get your attorney involved may be up to no good. They can’t get away with ripping you off if your attorney is there.
Variable or Fixed Interest Rates?
Some lenders will charge the same interest rate to every client, no matter what. These lenders assume that every case brings the same amount of risk. They could also charge higher fees even if you’re going to win your case.
The best lenders will look at loans on a case by case basis and determine the amount you can receive and the interest rate. If they’re not sure your case is winnable, they may deny the loan or charge a high-interest rate to try to prevent losing money.
Timing of Funds
A settlement loan is an indication that you need access to cash quickly. Check with potential lenders to find out how fast you’ll get the cash once the loan is approved.
Reputable lenders will disperse the funds to your lawyer. Your lawyer will then hand the funds over to you. This can be done within a couple of days of loan approval.
Does a Settlement Loan Impact Your Credit?
You should know how lawsuit loans impact your credit score. When you apply for a credit card or personal loan, a lender will do a hard credit pull, which appears on your credit report. This could bring down your credit score a couple of points.
A settlement loan looks at your lawsuit, not your credit to determine if you qualify for a loan. From that perspective, your credit score isn’t impacted.
You may find yourself in a position where you owe interest on a loan before you get your settlement. If you don’t pay on time, that could have a negative impact on your credit. This is why it’s so important to understand the terms of the loan before you sign up.
Lawsuit Loans Are a Financial Option
The worst thing about being involved in a lawsuit is the time that it takes to receive a settlement. It can be very stressful if you’re waiting for funds to pay for basic needs.
Lawsuit loans can ease the pressure by giving you financial relief in the form of an advance of your settlement payment. You have to work with your attorney to get the loan, but that protects you from bad lenders.