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Lawsuit Loans

Lawsuit Loans
Secure the funds you need with ease by applying for lawsuit loans online. Our platform allows you to compare various loan options, ensuring you get the best rates tailored to your financial situation. Don't let bad credit hold you back - explore our no credit check options today and take control of your financial future.
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Updated:
13.03.2024
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Reviews
CreditFresh
4.8
The application process was a breeze, and I received a response within minutes. This straightforward and prompt procedure proved to be a great help to me during a crucial time of need.
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JG Wentworth
4.6
The assistance I received was exceptional. My representative handled my case with care and provided all the necessary information...
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OneMain Financial
4.4
The loan application process was straightforward, and the representative I interacted with displayed patience, provided informative answers, and was quite pleasant throughout...
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My Funding Choices
4.6
The process was swift and straightforward, which was particularly helpful during a time when, despite my reluctance to seek assistance, I genuinely needed help.
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Plain Green Loans
2
The interest rate is shockingly high, and it feels like taking advantage of individuals facing financial challenges when unexpected expenses arise...
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Advance America
4.6
I have never encountered any issues with this company. They consistently deliver funds on time, and the repayment process is straightforward...
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Lawsuit Loans

What is a Lawsuit Loan?

A lawsuit loan, often referred to as lawsuit funding or litigation financing, is a financial arrangement in which a lending company provides funds to a plaintiff involved in a legal case, typically a personal injury or civil lawsuit. These loans are not traditional loans in the traditional sense, as they are typically considered non-recourse advances, meaning they are only repaid if the plaintiff wins the case and receives a settlement or judgment. Lawsuit loans are intended to help plaintiffs cover immediate expenses such as medical bills, legal fees, and living costs while their case is ongoing, allowing them to potentially pursue their claims without financial strain.

Major Types of Lawsuit Loans

  1. Pre-settlement funding. Pre-settlement funding or lawsuit cash advance is a traditional lawsuit funding that implies obtaining a loan before the outcome of the lawsuit. Lawsuit funding requires future settlement from the state or the employer as collateral. Pre-settlement loans are very common because lawsuits in personal injury cases can go on for years. Accident victims, in some cases, cannot work for health reasons, so a pre-settlement loan will help them pay medical bills and living expenses before the case is resolved and they get settlement funds.

  2. Post-settlement funding. Post-settlement funding is financing that is intended for borrowers who have already received a settlement but are still waiting for it to be credited to a bank account. This type of fair settlement loan is risk-free as the case is won in court, and compensation will be 100% received. This type of funding can help the borrower to continue paying bills and pay for a personal injury lawyer after the case is won, since the duration of the lawsuit-funding process can reach up to several years.

  3. Commercial litigation funding. Commercial litigation funding is a type of financing that is intended for participants in lawsuits, where cases concerning businesses are resolved. These trials are the most complex and protracted. Such financing can help the parties to pay for legal services before the announcement of the court's decision and payment of compensation to one of the parties.

  4. Attorney funding. Attorney funding is a loan option for private lawyers or law firms. This financing allows them to expand their business and increase cash flow. Law firm cases are usually delayed for many months and years, and this reduces the possible profit since the lawyer has been working on one particular case for a very long time. Borrowers who receive a lawsuit settlement loan often hire private lawyers. Such a lawyer can get attorney funding while waiting for their client to win the case and get a settlement.

  5. Structured settlement funding. The state often disposes of settlement in different ways. In some cases, the settlement can be structured or issued using annuities. This means that the settlement is not issued in a single payment but is issued in equally defined monthly or annual payments. In such a situation, the victim may lack such small payments to pay bills or the services of a lawyer. With structured settlement funding, the borrower can receive a one-time payment in the full amount of the settlement instead of annuities. A credit union will buy out the borrower's annuities and give them the entire amount of compensation in full.

Features

  1. Non-Recourse Funding. One of the key features of lawsuit loans is that they are usually non-recourse, which means that if the plaintiff does not win the case or receive a settlement, they are not required to repay the loan. The repayment is contingent upon the outcome of the lawsuit, reducing the financial risk for the borrower.

  2. No Credit Check or Employment Verification. Unlike traditional loans, lawsuit loans are approved based on the strength of the lawsuit itself rather than the borrower's credit history or employment status. This is because the lender's primary consideration is the potential settlement amount.

  3. Quick Access to Funds. Lawsuit loans offer plaintiffs quick access to funds, often within a matter of days after approval. This can be crucial for individuals facing financial hardship due to medical bills, lost wages, or other expenses resulting from the lawsuit.

  4. Case Evaluation and Approval Process. Before approving a lawsuit loan, lending companies evaluate the strength of the underlying lawsuit. This evaluation includes assessing factors such as the potential settlement amount, the legal strategy, and the overall viability of the case. Once approved, the borrower agrees to the terms and receives the funds, usually in a lump sum or through periodic disbursements.

Pros and Cons

Pros

Financial Support During Legal Proceedings. Lawsuit loans provide plaintiffs with much-needed financial assistance to cover immediate expenses such as medical bills, rent, mortgage payments, and daily living costs. This can alleviate financial stress and allow individuals to focus on their legal case without worrying about their financial situation.

Non-Recourse Structure. One significant advantage is the non-recourse nature of lawsuit loans. Borrowers are not obligated to repay the loan if they lose the case or fail to secure a settlement. This minimizes the borrower's risk and prevents them from being burdened with additional debt in the event of an unfavorable outcome.

Leveling the Playing Field. Lawsuit loans can help balance the scales for plaintiffs who are facing well-funded defendants or insurance companies. By providing access to financial resources, plaintiffs can afford to pursue their cases more vigorously and avoid settling for lower amounts due to financial pressure.

Cons

High Costs. One of the main drawbacks of lawsuit loans is the potentially high costs associated with them. The interest rates and fees for these loans can be substantially higher than those of traditional loans. Borrowers might end up owing a significant portion of their settlement or verdict to the lending company, reducing the amount they ultimately receive.

Lack of Regulation. Lawsuit loans are not as heavily regulated as traditional loans, which can leave borrowers vulnerable to unscrupulous lending practices. Some lending companies might take advantage of the borrowers' urgent financial needs, offering unfavorable terms that borrowers may not fully understand.

Impact on Settlement Negotiations. Accepting a lawsuit loan might impact a plaintiff's willingness to settle the case. Since the loan amount and accrued interest need to be repaid from the settlement or verdict, plaintiffs might be less inclined to accept reasonable settlement offers, hoping for larger payouts that could cover the loan and expenses. This could potentially prolong legal proceedings.

How to Get a Lawsuit Loan

Apply for a Loan

  1. Assess Your Situation. Evaluate your financial needs and the strength of your case. Lawsuit loans are typically granted for cases with potential for a substantial settlement or verdict. Make sure you have a clear understanding of your current financial situation and how much funding you require.

  2. Research Lenders. Look for reputable lawsuit lending companies. Research their reputation, terms, interest rates, fees, and client reviews. Choose a lender with transparent terms and a track record of fair practices.

  3. Gather Case Information. Collect all relevant details about your case, including legal documents, court filings, medical records, and any communication with your attorney. This information will be crucial during the evaluation process.

  4. Choose a Lender and Apply. Select a lending company that suits your needs. Complete their application form, providing details about your case and personal information. Some lenders might require your attorney's cooperation to access case details.

  5. Case Evaluation. The lending company will review your application and assess the strength of your case. They'll consider factors such as potential settlement amount, liability, and the likelihood of success. This evaluation determines the loan amount you qualify for.

  6. Loan Offer and Terms. If approved, the lender will provide you with a loan offer detailing the loan amount, interest rate, fees, and repayment terms. Carefully review and understand these terms, seeking clarification if needed.

  7. Consult Your Attorney. Share the loan offer with your attorney to ensure they're comfortable with the terms. They might offer insights on how the loan could impact your case strategy and settlement negotiations.

  8. Acceptance and Funding. If you agree to the terms, formally accept the loan offer. The lending company will provide the funds, often via a bank transfer or check, within a few days. Be aware that there might be a waiting period between acceptance and funding.

  9. Use Funds Wisely. Utilize the funds for essential expenses like medical bills, living costs, and legal fees related to your case. It's important to manage the funds prudently and avoid unnecessary spending.

  10. Progress Updates. Keep the lending company informed about the progress of your case. Some lenders might request updates from your attorney as the case moves forward.

  11. Case Resolution and Repayment. When your case settles or receives a verdict, the lending company will receive the agreed-upon repayment directly from the settlement amount. If your case is unsuccessful, you typically won't owe anything to the lender.

Requirements

  1. Active Lawsuit. You must have an active legal case, such as a personal injury, medical malpractice, or other civil litigation.

  2. Attorney Representation. You must be represented by an attorney who is willing to cooperate with the lawsuit lending company.

  3. Expected Settlement or Verdict. The case must have the potential for a substantial settlement or verdict. Lenders assess the likelihood of a favorable outcome.

  4. Legal Documentation. Provide necessary legal documents, court filings, medical records, and any other relevant case details for evaluation.

  5. Minimum Settlement Amount. Some lenders may require a minimum expected settlement amount to consider your application.

Conditions

  1. Loan Amount Determination. The loan amount is determined based on the potential settlement or verdict amount and the lender's evaluation of the case's strength.

  2. Interest Rates and Fees. Understand and agree to the interest rates and fees associated with the loan, which can vary among lenders.

  3. Repayment Contingent on Outcome. The loan is repaid only if you win the case or secure a settlement. If you lose, you're typically not required to repay the loan.

  4. Attorney Cooperation. Your attorney's cooperation is vital, as they might need to provide case updates and documentation to the lender.

  5. Consultation with Attorney. Your attorney should review and approve the loan terms, as it could impact your legal strategy and potential settlement negotiations.

  6. Funding Timeframe. There might be a waiting period between loan approval and receiving the funds, usually a few days.

  7. Case Progress Updates. Keep the lender informed about the case's progress, including any developments, settlement offers, or verdict outcomes.

  8. Repayment from Settlement. Upon settlement or verdict, the lender receives the agreed-upon repayment directly from the awarded amount.

  9. Impact on Settlement Negotiations. Be aware that the loan amount and accrued interest could affect your willingness to accept settlement offers.

  10. Legal and Financial Advice. It's recommended to consult legal and financial professionals to understand the loan terms fully and consider alternatives.

Best Places to Get a Lawsuit Loan

  1. USClaims. Offers low, non-compounding rates and is known for transparency. Compare their rates against other offers to gauge the value.

  2. Thrivest Link Legal Funding. Provides fast settlement loans with reasonable terms and larger funding sums. Highly rated with a 4.7/5.0 rating on Google.

  3. High Rise Financial. Based in California, they have a significant number of five-star reviews. Offers pre-settlement funding and additional services.

  4. Prime Case Funding. Located in New York, they're highly rated on Yelp and advertise a competitive compounded monthly rate of 2.75%.

  5. 5 Star Legal Funding. Based in New York and established in 2006, they offer simple, non-compounding rates and capped repayment terms.

  6. Anchor Fundings. Offers legal funding for plaintiffs and attorneys nationwide. Limited information is available about them from online consumer reviews.

  7. Baker Street Funding. A relatively new personal injury case funding company based in New York. They are experiencing rapid growth and claim to provide rates between 1.5% and 3.4%, compounding monthly.

  8. Bridgeway Legal Funding. A direct funding company located in New York. They provide non-recourse funding with options for both simple and compounding rates.

Ways to Get the Money

  1. Direct to Plaintiff. The funds are transferred directly to the plaintiff's bank account, allowing them to access the money as needed for expenses related to their legal case or other financial obligations.

  2. Attorney's Trust Account. In some cases, the lender might disburse the funds directly to the attorney's trust account. This allows the attorney to manage and allocate the funds for specific legal expenses and the plaintiff's needs.

  3. Credit Card or Debit Card. Some lenders might offer the option to load the approved loan amount onto a prepaid debit card or a dedicated credit card issued specifically for the lawsuit loan. Borrowers can then use the card for expenses.

  4. Escrow Account. The funds are placed in an escrow account managed by a third-party service. The borrower can access the funds through the service as needed, ensuring transparency and proper allocation.

  5. Check Issuance. The lender may issue a physical or electronic check for the approved loan amount, which the borrower can deposit into their bank account.

Things to Pay Attention to

Choosing a lawsuit company

To choose the best lawsuit settlement funding company, the borrower first needs to know the opinion of their attorney. The attorney should be the first resource to search for information since the attorney has an opinion about certain companies. The next resource should be the American Legal Finance Association (ALFA). This organization publishes lists of lawsuit loan companies and tells about their conditions.

Interest rates are the first criterion for choosing the right lawsuit cash advance company. Lenders also call them "funding fees." If the borrower takes a relatively small amount on credit, then some dishonest companies, using high-interest rates, try to bring the loan amount closer to the settlement amount to fully receive it after completing the lawsuit.

The borrower needs to find out how often the lawsuit funding company compounds interest rates. Interest can be added either every month or more often. The loan term for this financing cannot be properly defined, as it depends on the term of the trial. If interest rates increase frequently, then at the end of the lawsuit, the borrower may get into a situation where they gave the lender 2 or 3 times more than they originally borrowed.

The borrower must make sure that they do not pay the pre-settlement funding company more than the amount of financial compensation.

The borrower should also pay attention to such things that apply to all companies that provide services. The borrower needs to monitor how courteously and politely they address him and whether they willingly answer his questions. The way the company's employees interact with customers well demonstrates the level of quality of the company's services.

The true cost of a lawsuit loan

A lawsuit loan can cost the borrower quite expensive, as it carries a lot of unexpected fees and expenses. First, the borrower needs to pay attorney's fees. In personal injury cases, these fees make up one-third or one second of the settlement. Law firms lead the victim through the entire personal injury lawsuit. Therefore, they require a high fee.

The borrower also needs to pay bills that are related to litigation. In this category, there are process server fees, copy costs, and court costs.

The victim who receives a lawsuit loan usually has very serious injuries. So, another big waste will be medical bills.

At the time of receiving the settlement, the borrower will pay the lender a much larger amount than they originally took. This is because lawsuit loans have a very high-interest rate. Moreover, interest is added every month or with a different frequency. Personal injury lawsuits last from several months to several years. For such a long time, an impressive amount can be added only because of interest.

Legal regulations of lawsuit loans

The borrower needs to remember that state and federal agencies regulate the lawsuit loans industry in a different way than other credit industries. Lawsuit loans are not heavily regulated at the legislative level. Pre-settlement funding companies have only a few small restrictions on charge for their services, but this is where the regulation ends.

How to Repay a Lawsuit Loan

  1. Wait for Case Resolution. Repayment typically occurs when your case settles or you receive a verdict. The loan repayment is deducted directly from the settlement or verdict amount.

  2. Attorney's Role. Inform your attorney about the lawsuit loan and its terms. They will work with the lending company to facilitate the repayment process.

  3. Lender's Notification. Once your case is resolved, the lending company will be informed by your attorney or the court about the outcome.

  4. Repayment Amount Calculation. The lender calculates the repayment amount based on the terms of your loan agreement, including the principal loan amount and accrued interest.

  5. Settlement Disbursement. When your settlement funds are received, the lender deducts the agreed-upon repayment amount, including interest and fees.

  6. Attorney's Disbursement. After deducting the loan repayment, your attorney receives their fees, and the remaining amount is disbursed to you.

  7. No Monthly Payments. Unlike traditional loans, you don't need to make monthly payments. The repayment is a one-time deduction from your settlement or verdict.

  8. Repayment Verification. Review the final settlement statement to verify that the loan repayment was executed accurately.

  9. Consult with Professionals. If you have any concerns or questions about the repayment process, consult with your attorney or financial advisor.

  10. Financial Planning. After repaying the lawsuit loan, consider creating a financial plan to manage your remaining settlement funds wisely.

Alternatives

  1. Personal Loans. You might explore getting a personal loan from a bank, credit union, or online lender, such as SoFi, Avant, or Upgrade. Personal loans typically have lower interest rates than lawsuit loans and can be used to cover various expenses.

  2. Credit Cards. If you have a credit card with available credit, you can use it to cover immediate expenses related to your legal case. Keep in mind that credit card interest rates can be high, so it's important to manage this option carefully.

  3. Home Equity Line of Credit (HELOC). If you own a home, you could consider using a HELOC to access funds for your legal expenses. However, this option puts your home at risk if you're unable to repay the borrowed amount.

  4. Personal Line of Credit. A personal line of credit is a predetermined credit limit extended by a bank or financial institution. You can borrow and repay funds as needed, paying interest only on the amount you borrow.

Editorial Opinion

Lawsuit loans have emerged as both a lifeline and a topic of controversy in the legal landscape. On one hand, they provide a crucial financial bridge for plaintiffs grappling with mounting medical bills, lost wages, and legal expenses. This lifeline can level the playing field, enabling individuals to stand firm against well-funded defendants and insurance giants. However, the allure of quick cash comes with a caveat—a cost that often transcends the principal amount borrowed. Critics argue that lawsuit loans disproportionately burden vulnerable individuals with steep interest rates and fees, raising concerns about the potential exploitation of those already navigating a complex legal terrain.

Proponents emphasize the non-recourse nature of these loans, highlighting that borrowers are only obligated to repay if they secure a settlement or verdict. This aspect, they contend, mitigates financial risk for plaintiffs, who might otherwise struggle to manage both their legal battles and their day-to-day lives. Nonetheless, scrutiny remains vital. The opaque nature of some lawsuit lending practices underscores the necessity for greater regulation, transparent terms, and improved borrower education. In striking the balance between empowerment and exploitation, it's imperative for individuals to exercise caution, explore alternative financial solutions, and enter into lawsuit loans with eyes wide open to the potential pitfalls they entail.

Important

Keeping your Debt-to-Income (DTI) ratio below 30-40% of your monthly income is crucial. This will help you avoid potential financial problems in the future. Additionally, always assess the necessity and feasibility of taking a loan, ensuring you can comfortably manage its repayment.

How to Choose a Lender

  1. Make sure to confirm whether the lender is licensed to operate in your state. You can verify this information with your state regulator or attorney general.

  2. Check if the lender is a member of a reputable association, such as the Community Financial Services Association of America. Membership in such organizations may provide an extra level of reliability.

  3. Carefully review all the terms and conditions of your payday loan contract.

  4. Thoroughly examine the interest rates on payday loans and ensure that your contract includes a detailed breakdown of the total cost of the loan.

  5. Take advantage of your right of rescission. Usually, you can rescind the loan within three days after signing the agreement. Alternatively, there is typically a "cooling-off" period, which allows you several days to thoroughly review the contract before making an informed decision to enter into a consumer loan agreement based on the terms specified by the lender.

  6. Choosing a payday lender is a significant decision that demands careful consideration and a good understanding of how such organizations operate.

Methodology

At Finanso, we've carried out a comprehensive analysis of over 100 lenders, assessing them based on 35 different parameters across six key categories: accessibility of loans, customer relations, quality of service, interest rates, and transparency of conditions.

In each category, we carefully considered the most critical factors in selecting a lender. These factors include the interest rates, available loan amounts, minimum credit score, minimum income, application fees, and the speed at which funds are transferred.

At Finanso, we highly value our users, which is why we also focus on the quality of customer service, user reviews, and additional features that can aid our users in making a well-informed decision.

Our ultimate goal is to provide insightful recommendations and expert advice to assist you in selecting a lender that best caters to your specific needs.

Other Personal Loans

FAQ

Are lawsuit loans worth it?

A lawsuit cash advance should be taken only if other credit options are not suitable for the borrower. Even though this loan is quite safe since the borrower will not pay the lender more than their settlement amount, this loan has too high interest rates. On average, the APR rate for lawsuit funding can be from 27% to 60%, which is quite high and comparable only with a high-interest payday loan.

How does a settlement loan work?

Suppose a person has had an accident, suffered from medical negligence, or received an industrial injury at work. In that case, they participate in a lawsuit, as a result of which they can receive a settlement. However, most often, the victim cannot work, so they need funding for the duration of the trial. Legal funding companies give such borrowers a loan secured by settlement. If the borrower wins the case, he gives the received compensation to the lender. If the borrower loses, they have the right not to return funds.

How can I get a loan while waiting for a settlement?

The borrower must contact a lawsuit financing company to get a lawsuit loan. A lawsuit settlement loans funding company will check how reliable the case of a potential borrower is. The pre-settlement funding company will also conduct a credit report check and background check for the presence of bankrupts or illegal actions committed. If such a case suits the bank or credit union, they issue a loan to the borrower. The application can be submitted online.