If you file a lawsuit and intend to see it through, you’re in for the long-haul. Trials can take from six months to three years to get settled depending on the strength of your case and the ferocity of the defendant.
But if you filed a personal injury case, those years can exacerbate the pain. A loss of income uncovered medical bills, and the cost of dealing with the strain for you and your family continue as you wait for a resolution.
The last thing you need is to find yourself in real financial jeopardy while waiting for your settlement. That’s why some people turn to lawsuit loans.
What is a lawsuit loan, and is it the right option for you? Keep reading to learn more about this form of settlement funding.
What Is a Lawsuit Loan?
Lawsuit loans, or settlement loans, provide you with cash as you wait for your case to move through the courts.
When you take out a loan, you borrow against the amount you expect from a settlement. You then pay back the loan, plus interest or fees, when your agreement finally clears.
People take out lawsuit loans to cover essential bills like medical bills, mortgage, and the cost of living. The loans are particularly popular when an injury resulted in a significant loss of income.
Can I Get a Lawsuit Loan?
Potentially. Lenders look for winnable cases with significant settlements when determining who is eligible for a loan.
Why? Because most lenders only ask you to pay back the loan if you settle. If you lose your case or receive a substantially smaller settlement, you don’t pay the loan back.
Reputable lenders will work with your attorney to learn more about your case and make a decision. Your attorney will need to agree to cooperate (not all attorneys will), and the process can take weeks from the time of application.
How Much Do Lawsuit Loans Cost?
When you borrow from lawsuit funding companies, you will not only pay back the principal but other fees and interest.
First, a lender may ask you for an application fee to consider the case because a significant amount of work goes into the review. Paying a fee doesn’t guarantee a loan offer.
Second, you need to consider the interest applied to your loan. Because lawsuit loans aren’t financial products, they aren’t subject to the same regulations as personal loans. The interest rate is also known as a funding fee and can range from 27 percent to 60 percent per year.
The cost of the funding fee can double the repayment amount your settlement is still one to two years away.
The Bottom Line on Lawsuit Loans
A lawsuit loan is a lifeline if you are waiting on a settlement, but your bills were due yesterday. However, the fees mean you should enter into them with both eyes open.
Be sure to consult your attorney about lawsuit loans before applying. Not only will your attorney know the best law lawsuit loan companies, but you ultimately need them to cooperate with the lender you choose.
Are you waiting on the results of your lawsuit? Keep browsing our blog for more great legal content.