Millions of Americans that survive personal injury are faced with physical, mental, and financial problems. Some of these problems last a lifetime. The effect on the U.S. economy is devastating, with the country spending over $457 billion on nonfatal injuries in 2013 alone.
When you have experienced a personal injury, one of the first things you do is file a personal injury lawsuit. It’s likely you’ll want to consider suitable pre settlement loans at the beginning or in the course of the lawsuit.
But what exactly are pre-settlement loans? How does it work? How can you get one?
These are some of the issues we discuss in this comprehensive guide. Keep reading to learn more.
What Is a Pre-Settlement Loan?
A pre-settlement loan refers to the money you get upfront in exchange for a percentage of the future proceeds you expect from your settlement. As soon as your case is determined and you receive your settlement, the company then receives the portion you agreed upon.
Pre-settlement lawsuit funding can prevent you from sinking into debt when your injury prevents you from going to work. This funding is different from conventional loans in that you are not expected to pay back the money over a set number of years. Rather, you sell a percentage of your expected settlement proceeds in exchange for a cash advance.
How Do Pre-Settlement Loans Work?
Before you take out a pre-settlement loan, you must file an eligible lawsuit. Once you apply for settlement funding, the lawsuit company will evaluate your personal injury case’s merit and weigh the chances of you winning the case and receiving a settlement. They’ll also estimate how much you may receive from the settlement and decide whether to offer you an advance or not.
Companies for funding make a profit by charging you fees and interest on top of the advance they give you. In most cases, you don’t need to make payments before you receive a judgment, or your case is settled.
What Sort of Claims Are Covered by Pre-settlement Funding?
Lawsuit settlement loans are not for everyone involved in an accident. Mostly, they’re for people involved in a personal injury lawsuit. Your attorney must fill out an application that describes your case.
You may be eligible for a pre-settlement loan if you’ve suffered:
- Personal injury
- Product liability
- Premises liability
- Medical malpractice
If your relative passes away as a result of the actions or lack of appropriate action of someone else, you can also file a wrongful death lawsuit and apply for pre-settlement funding.
How to Get a Pre-Settlement Loan
Now that you have some information on what a pre-settlement loan is and who is eligible, you may be wondering how you can go about getting one. In this section, we give you a step-by-step guide for getting pre-settlement funding.
Search for a Potential Lawsuit Loan Company
The best lawsuit loan companies are those who go out of their way to meet the client’s needs. Finding such a company may take some time and patience. Of course, you can still enlist the help of a friend or family member to assist you in your search.
Keep your search broad, then narrow down to three or so companies that interest you. You can do so by looking at their references, fees, interest rates, transparency, and communication styles. Note down their address, contact information, working times, and so on.
Prepare the Appropriate Documentation
The best way to ensure that your pre-settlement loan is quickly approved is to be well organized from the beginning. One way to do so is to make sure that you have all the required paperwork pertaining to your case ready. With the right paperwork, your pre-settlement loan can be disbursed in hours.
So, what information do lawsuit funding companies require? You’ll need the same documents your lawyer is using to fight your case. The lawsuit loan company will need information about:
- The defendant
- Their insurance agency
- What the limit of their policy is
- If the defendant is actually liable for your injuries
Find out what other documentation you need and have it in hand before applying for the loan.
Talk to Your Attorney About the Lawsuit Loan
Your personal injury lawyer is the most important person throughout your lawsuit. They are the only person who knows more about the case than you. That’s why you need to involve them in everything you’re doing that pertains to the case.
The lawsuit funding company cannot review and finalize any transaction without your lawyer’s participation. Meet with your attorney and talk to them openly. If you have any questions or need advice and recommendations, your attorney should be able to help.
Apply for the Pre-Settlement Loan
You have learned about pre-settlement loans, identified a suitable lawsuit company, and received advice from your attorney. Now it’s time to start the actual application process.
The great news is that this process is simple. Present the needed paperwork for the lawsuit funding company to begin the evaluation process. If you opt to apply online, chances are the process will be free of charge.
You’ll need to give general information about you and your case. You’ll also need to give your lawyer’s contact information. After receiving your application, the lawsuit loan company will contact your attorney for any details they need to evaluate your case’s eligibility.
A team of professionals known as underwriters evaluate your case and decide whether you are eligible or not. This decision is made after looking at several factors, including damages, liability, and insurance.
Sign the Lawsuit Loan Contract
If the pre-settlement loan company has approved your loan application, they’ll give you the purchase agreement for the funding. Take your time to read through the contract, so you don’t miss any important details. Your attorney should be able to help you here and point out anything that looks suspicious.
If you agree on the proposed fees, interest, and terms and conditions, you can now sign the contract and wait for the pre-settlement loan funds in your account. Most lawsuit loan agencies disburse funds within 24 hours.
How Much Should You Expect to Get?
The amount of money you are eligible for will depend on your expected settlement. That may range from a few hundred dollars to hundreds of thousands, depending on the expected outcome of your case and your needs.
What If You Need More Money Later?
You can get more than one advance, based on the details of your case. Typically, loan settlement companies allow plaintiffs to sell up to 20 percent of the estimated value of their case. If the advance you received initially was less than this amount, you can apply for another advance.
What If You Lose Your Case?
The lender can’t recoup prefunded money unless the plaintiff wins their case. This risk is part of their business. Therefore, you don’t need to worry about repaying the advance in case you lose the case.
What if the settlement turns out to be less than what you agreed to repay initially? Well, the lender can’t demand that you make up the difference. They’ll only claim the settlement proceeds left after the payment of prioritized fees, such as court costs and attorney fees.
Of course, the downside of this situation is that you may be left with little or nothing once your case is over.
Why It Makes Sense to Apply for a Pre-Settlement Loan
Getting a lawsuit loan can prove beneficial in many ways. With the cash, you can cover your expenses and keep up with your bills.
Settlement loan companies also don’t consider your credit when making a decision on whether you are eligible for the advance or not. All they’re interested in is the chances of your case succeeding and whether the settlement will be sufficient to give then the desired return on investment.
Also, these loans are disbursed quickly. Within just hours or days of your application, you should have the cash in your account. This is a huge relief when you are pressed for cash.
Finally, a pre-settlement loan gives you the time you need to negotiate a better deal. Court cases can be frustrating and costly, and the defendant may offer you a certain amount of money as a settlement. If you feel that what they’re offering isn’t enough, you have more time to negotiate a better offer.
A Pre-Settlement Loan Can Rescue You When You Need It the Most
A personal injury can significantly affect your life, taking away your ability to work. When that happens, it’s within your rights to file a lawsuit against the perpetrator and receive your rightful compensation. Pre-settlement loans come in handy at such times, helping people in your situation avoid financial strains resulting from their injuries.
Would you like to learn more about pre-settlement funding? Please keep visiting our blog.