If you’ve been in a car accident, you can file a claim to get compensated for your injuries. While the case is ongoing, you’re at the hospital, getting your injuries treated. Because of this, you’re not capable of working to pay hospital bills and your medicine.
What will you do to make ends meet?
You can decide to get treatment after the case is settled. However, that’s still not a good idea. You know that your case will win, but waiting on a settlement is difficult, especially if you need cash now.
If you’ve filed a lawsuit and are worried about your finances, you can consider getting pre-settlement loans. However, are these loans the best option for you? Here is everything you need to know about the advantages and disadvantages of accident settlement loans.
But first, what is legal funding?
Legal funding is often termed as a lawsuit loan, although it’s not technically a loan. Regardless of its name, it is a method of providing financial assistance to a plaintiff whose case is still pending. This is a source of money based on a prospective settlement or recovery.
Legal funding is still new. Despite this, it’s increasingly becoming popular to both plaintiffs and attorneys who represent them.
The procedure of getting funded is quite simple, especially with the help of lawsuit funding companies. Such firms can help you get your cash in advance. You can get up to $500,000, depending on your case.
Here are three simple steps to getting a lawsuit loan funding.
- You need to submit an application form to a lawsuit loan company. If you meet the requirements, the firm will be in contact with your attorney. They will ask for further information about your case.
- Your application will then be reviewed by an underwriter. You, your attorney, and the lawsuit loan company will enter into a formal agreement.
- Finally, the funds will be transferred to you. You can use them to pay for every day costs or other bills, such as medical bills.
Both the plaintiff and the lawyer are under stress and pressure due to a lengthy dispute. Usually, clients will ask to stop a judicial process. While it eases the stress, it’s disadvantageous for the client’s attorney. Ending the case early means all of the attorney’s hard work for months has been wasted.
The plaintiff and lawyer have an interdependent relationship. The difficulties of one have an impact on the other. Legal funding for lawyers enables them to continue offering legal services to clients. At the same time, it also allows them to build a stronger case.
Lawyers can, then, concentrate all of their efforts on developing a good legal strategy. And this boosts their expertise in the field over time.
Lawsuits are usually time-consuming. When you get into an accident through negligence, disputes often do not provide immediate results.
There are many reasons as to how this is the case. The negligent party’s insurance company may have refused to pay the amount settled by your lawyer. Your medical condition also contributes to the delayed process.
Regardless of the reason, a personal injury case requires a lot of work and effort from your attorney. You can wait until the end of the case, but there’s a risk of struggling financially if you don’t get financial aid. That’s why getting a personal injury settlement loan is the best option you have.
The following are some of the benefits that lawsuit funding may provide:
Even if you expect a positive outcome, your case can take months to be resolved. With pre-settlement money, you can manage and pay your bills on time. You can use it to pay for your legal fees, rent, mortgages, medical bills, and even debts.
Most lawsuit loan companies offer same-day accident loans, which are pretty helpful in your case. Pre-settlement loans can help you obtain the money you deserve without having to wait for it.
People are unaware of how much time and work goes into bringing a lawsuit to court. If you’re in a tight financial situation, you may be tempted to settle your case before it’s ready.
Some insurance companies offer the least amount of money within a short period. It can be tempting to accept even their lowest offer, considering the fact that you need cash now. If you’re patient, you are more likely to receive a greater settlement.
Getting legal funding now can help you stay afloat until your lawsuit is resolved. You can also offset any financing costs that the legal funding company can charge you. In other terms, pre-settlement loans help you negotiate for a higher amount of money.
If you have been disabled due to a car accident, there’s a strong chance you won’t be able to work.
For years, insurance firms have been known to stall legal proceedings. At the same time, your injuries stopped you from working. How can you pay for your basic needs without any source of income? Pre-settlement money can assist you in not just paying your debts but also providing you with your basic needs.
If you have a personal injury case, one option is to get bank loans. However, pre-settlement funding provides more than a bank loan could.
With a pre-settlement loan, you don’t need to repay what you owe if you lose your case. The lawsuit lending company will take on all of the risks.
With a bank loan, the borrower must have collateral and good credit. You also need to be willing to pay fees and interest regardless of the outcome. Pre-settlement funding does not require credit approval because it is not a loan. Funding is granted solely on the basis of the case’s merits.
While lawsuit funding helps you pay your bills, getting advanced payment also has its downsides. Here are some disadvantages of pre-settlement loans that you can consider. It’s important to understand them before calling a lawsuit loan company for help:
With lawsuit funding, the funding company is taking a chance with your case. Remember that if you lose, they are not compensated for it. As a result, they need to earn a competitive return to compensate for any unsuccessful cases they invest in. Every lawsuit lending company is different, but there’s no way money is given away for free.
Some fraudulent lawsuit loan companies have additional fees. This can include an application fee, origination fee, or some other fake processing fee. And these can cost you hundreds of dollars. While that is the case, there are lawsuit lending companies who won’t abuse your case.
Before signing, your application should be examined for free. Any repayment fees should be explicitly stated in your contract. This way, you can contemplate if you can repay the money and refuse if you don’t like the conditions.
The projected value of your case and the risk connected with it determines if you receive an offer. There are only a number of cases qualified for a pre-settlement loan.
Only those with clear evidence that the defendant is at fault and injuries on your part are qualified. Defendants should also provide sufficient insurance to guarantee that the plaintiff is properly compensated.
The federal government has no restrictions on pre-settlement financing. Each company has its own requirements and disclosure procedures. Because of this, you’ll find it difficult to compare their offers with each other.
You’ll need to conduct thorough research or seek legal advice. More importantly, make sure that you fully understand the conditions of any contract you want to sign.
Contacting several lawsuit loan companies helps you decide if they are the best fit for you. This way, you can compare their terms, fees, and interest rates with each other. You can also ask them directly about any other information you need.
Another option is to look at legal funding reviews on the internet. This provides you with a convenient way of choosing the right lawsuit loan company.
While you’re reviewing terms, it’s important to know important information regarding the offer. The list below will briefly discuss some of the things you need to look for in a funding company.
- Determine whether the interest rate is simple or compound. Compound interests tend to be more costly. If the company uses compound interest, it helps to know the compound interval.
- A list of all costs, other than interest, that will be charged.
- Confirmation of the conditions of the cash advance repayment in writing. It should include a clause that you owe nothing if the case is not successful.
- The source of repayment for the money you received should only be the settlement money. This means you’re not liable for anything if the settlement is insufficient to cover the amount you owed.
Lawsuit loans have their own advantages as well as disadvantages. Whether the former outweighs the latter, that depends on your situation. It’s usually your best choice to go through the case without taking financing as long as you can. Otherwise, look for the best lawsuit loan company that will help you in the process.
There are insurance companies that prioritize money above human lives. Because of this, you may not receive the justice you’re looking for. With lawsuit loans, you can both win your case and not get financially drained while your case is ongoing.
The best lawsuit loan company promotes transparency throughout the process. That’s why you need to scrutinize their terms to choose one that is right for you. If a lender won’t help you understand loan terms, it’s best to hop on to the next company on your list.